Clause 11 - Offence of buying scrap metal for cash etc

Scrap Metal Dealers Bill – in a Public Bill Committee at 6:30 pm on 11th September 2012.

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Photo of David Hanson David Hanson Shadow Minister (Home Affairs) 6:30 pm, 11th September 2012

I beg to move amendment 11, in clause 11, page 6, line 4, at end add ‘excluding cash payments.’.

This is a relatively trivial amendment, but it seeks to clarify a particular point. Subsection 11(1) states that a

“scrap metal dealer must not pay for scrap metal except” via the two methods that are outlined in that provision, but subsection 11(2) states that the

Secretary of State may by order amend subsection (1) to permit other methods of payment.”

I have simply added the words “excluding cash payments”, so that we do not find that the principle of the Bill is undermined by a future Secretary of State, of whichever party, who determines that they want to unpick the Bill by order. Someone might be able to clarify that that is not possible under subsection 11(2), but my reading of it is that a future Secretary of State could decide that our worthy commitments and discussions today were meaningless, and introduce by order an amendment to allow cash again. Our discussion of the matter, for many hours, could be completely undermined by a Secretary of State who determined that it was not worth a candle.

Photo of Jeremy Browne Jeremy Browne The Minister of State, Home Department

I must admit that when I considered the amendment I thought that we would be having a brilliantly circular debate about whether, under a clause entitled “Offence of buying scrap metal for cash etc”, it was necessary to introduce an amendment saying that the Secretary of State should not allow scrap metal to be bought for cash.

The purpose of the clause, which I appreciate allows a bit of flexibility, is to future-proof—that dread word—against potential future methods of payment. Were the legislation to have been passed 20 years ago, paying on the internet would not have been possible. Legislation then might have stipulated payment by cheque. Some types of payment become less fashionable or practical over time, and others more so. It is certainly not envisaged that a Home Secretary would act in such a way, and that is not what is intended under subsection 11(2).

The only matter in which I would defer to my hon. Friend the Member for Croydon South is that I take the right hon. Gentleman’s point that were a bloody-minded future Home Secretary intent on sabotage to come into office, he or she might seek severely to undermine the legislation by acting in a manner that was the 180 degrees opposite of what is intended by, I imagine, every member of the Committee, and if that were the case there would be no formal means to prevent them from doing so.  I suppose, therefore, that it depends a bit on whether the hon. Member for Croydon South thinks we will have a future Home Secretary with such malign intentions that we need to agree to the amendment. I am fairly agnostic on the matter. I think that it would end up looking like a fairly perverse bit of drafting to prevent a seemingly extremely unlikely measure from taking place. The purpose of the provision is to ensure that if certain methods of payment become common practice in the future they should be allowed, by giving the Home Secretary that degree of freedom.

Photo of Richard Ottaway Richard Ottaway Chair, Foreign Affairs Committee, Chair, Foreign Affairs Committee

I draw the Committee’s attention to the fact that the title of the clause is “Offence of buying scrap metal for cash etc”, so it would be pretty perverse if a Secretary of State sought to introduce provisions that went against that heading. I do not know precisely what the legal remedies are, but I suspect that he or she would not get far.

Simon Hughes rose—

Photo of David Hanson David Hanson Shadow Minister (Home Affairs)

It was never my intention to press the point, but this is legislation for as long as it exists. The Scrap Metal Dealers Act 1964 is only now being amended, so we could be dealing with legislation that remains in place for 50 years, and a subsequent Secretary of State or Minister theoretically could, under the Bill as drafted, without recourse to the House, by order—presumably even by an order that was not debatable or had to be prayed against—simply change the payment method. I am just testing the point and will not make a big meal out of it. I simply want to say that with the amendment we could have ensured that primary legislation was needed rather than the whim of a Secretary of State, but I am happy to withdraw the amendment if there is no movement on the matter. [Interruption.]

Photo of Joe Benton Joe Benton Labour, Bootle

I apologise, Mr Hughes; I did not catch your hand rising. By all means, have the floor.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

I do not want to get involved in this particular debate about the amendment, Mr Benton. We are about to come on to the stand part debate, and I do not want to catch my hon. Friend the Minister without any notice. Before we conclude this issue about cashless payments, which is a repeat of the current legislative position rather than something new, it would be helpful if the Minister, with the help of his civil servants, could put on the record the other places where, in legislation, we currently ban such payments. We should be careful about legislating for a particular solution in a particular industry if we do not understand what the implications are elsewhere. This is really a heads-up to my hon. Friend the Member for Croydon South, who might be able to give me the answer when we debate clause stand part in a moment.

Photo of Richard Ottaway Richard Ottaway Chair, Foreign Affairs Committee, Chair, Foreign Affairs Committee

On that specific point, may I ask the right hon. Gentleman a question? Is he talking about banning cashless payments in UK law or in other parts of the world?

Photo of Richard Ottaway Richard Ottaway Chair, Foreign Affairs Committee, Chair, Foreign Affairs Committee

In that case, I am afraid that I do not have the answer to hand, but I will certainly let him know later.

Photo of Jeremy Browne Jeremy Browne The Minister of State, Home Department

I do not know which other sectors of the economy face such draconian measures, but in response to my right hon. Friend, my understanding is that this requirement is needed because the abuses in this sector are so often achieved by using untraceable cash payments. Were we not to take the rather radical step of banning cash payments altogether, we would have a Bill with a massive hole in it which was open to abuse, because we would not be able to correlate the recorded information that is required in the Bill with the registered payment that would show the paper trail of the transactions. Therefore, we would not be able to catch transgressors.

My understanding is that large sections of this industry welcome the change. It may cause some inconvenience for them on the margins, but if they are behaving properly, they may feel that it would remove the disreputable parts of the industry—or at least severely impinge on them—which may well compete on an unfair basis with them as well as doing something that is morally wrong. I do not think that that is seen by the industry as a whole as being a bad proposal. On the contrary, it welcomes it even though it recognises that in some circumstances it may require some small degree of administrative difficulty.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

I am grateful to my hon. Friend for his answer. As I said, I was not seeking to catch him on the hop. I do not dissent from the fact that there is a benefit to the proposed measure and that there are people in the industry who see the benefit. It allows them to show the paper trail, which proves that they and those who work with them are clean. It would be helpful if my hon. Friend could arrange, at some convenient moment before Report, for a note to be given to those of us in the Committee who want the promoter of the Bill and the right hon. Member for Delyn to meet, which shows the consideration of the matter. I am clear that this is unusual. We want to ensure that it is justified and it would be really helpful to see if there are any other examples in English law.

Photo of Jeremy Browne Jeremy Browne The Minister of State, Home Department

While we have been having this conversation, I have sought further guidance about in which other sections of the UK economy it is specified in UK law that cash payments are forbidden, and I am told that there are no other sections. We are dealing with unique circumstances. There is such proliferation of criminal activity in this particular industry—I do not mean all the people who operate within it—that is aided and abetted by cash payments. The promoter of the Bill, supported by the Government, felt that this rather dramatic step was necessary to give the legislation the best chance of working in practice.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

I am grateful. That is helpful. It was a quick speech providing communication update, which is appreciated. I will reflect on whether there is anything else that it might be helpful to get on the record for people in the industry.

Yes, there is a big problem in the industry and people want to remedy it. Yes, this may be the best available solution. We have already had that debate once during  discussions on the legal aid Bill in the previous Session, when we agreed the principle. This Bill is only re-enacting that in a more logical place, which I accept entirely. I can think of other areas of commercial life where people would often suspect that there might not be an entirely clean ownership trail in respect of quite a lot of cash transactions, but this may be the largest sector or activity, both in numbers of activities and value, which is why such provision is justified. I will not trouble my hon. Friend at the moment, but we may need to get something in writing showing why this exceptional measure is needed. The Government would not be minded to implement such a principle in respect of any other sectors at the moment.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

On the issue of cash, I cannot think of an example in UK law—I accept the Minister’s comments—and this is not setting a precedent culturally or with the public out there, because in a lot of situations cash does not exist any more and there is not really an option to pursue a cash payment. Online is the big example: many companies just will not entertain people’s trying to use cash. The other big example is payment machines, because people cannot pay cash into a lot of those. People have to accept that and they kind of accept it. Culturally, but not in terms of UK law, we are moving towards a cashless society. People accept that and there is not a great resistance to it, although one might believe there may be.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

Just one last thing. I am really pleased that we have not gone down that road so far, although in the end we agreed that cheques and chequebooks should disappear. I was clear that, in spite of some in industry arguing for their disappearance, lots of my constituents and other people still want cheques as a means of paying for things and receiving money for the foreseeable future. Thank goodness, that will happen.

Photo of David Hanson David Hanson Shadow Minister (Home Affairs)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: 34, in clause 11, page 6, leave out lines 10 to 16 and insert—

‘() any person who makes the payment acting for the dealer.

‘(5) It is a defence for a person within subsection (4)(a) or (b) who is charged with an offence under this section to prove that the person—

(a) made arrangements to ensure that the payment was not made in breach of subsection (1), and

(b) took all reasonable steps to ensure that those arrangements were complied with.’.—(Mr Jeremy Browne.)

Clause 11, as amended, ordered to stand part of the Bill.