Beneficial Ownership – UK (UK0063)

Objective: The proposed beneficial ownership register will bring greater transparency to who bids on public contracts and owns or buys UK property. Status quo: We currently do not collect or publish this information Ambition: From 6 April 2016, all UK companies are required to hold a register of People with Significant Control (PSC) and from 30 June 2016 UK companies will start providing PSC information to the Companies House public register. The UK is a founding country of the initiative for the automatic exchange of beneficial ownership information. This commitment will require foreign companies who own or buy property in the UK, or bid on central government public contracts, to identify and register their beneficial owners.

1. Beneficial ownership

Commitment Text:We will establish a public register of company beneficial ownership information for foreign companies who already own or buy property in the UK, or who bid on UK central government contracts.

Objective:The proposed beneficial ownership register will bring greater transparency to who bids on public contracts and owns or buys UK property.

Status quo:We currently do not collect or publish this information.

Ambition:From 6 April 2016, all UK companies are required to hold a register of People with Significant Control (PSC) and from 30 June 2016 UK companies will start providing PSC information to the Companies House public register. The UK is a founding country of the initiative for the automatic exchange of beneficial ownership information. This commitment will require foreign companies who own or buy property in the UK, or bid on central government public contracts, to identify and register their beneficial owners.

Milestones:

1. The intention is to consult by the end of the year.

2. Introduce primary legislation in the third Parliamentary session.

Responsible Institution: Department for Business, Innovation and Skills

Supporting institution(s): Cabinet Office, mySociety, Natural Resource Governance Institute, ONE, Publish What You Pay UK, The Open Data Institute, Transparency International UK

Start date: May 2016

End date: March 2018

Commitment Aim:

This commitment follows from the second national action plan's push towards beneficial ownership transparency.^{[Note 1: Worthy, Ben ‘Offshore Tax Havens and Beneficial Ownership: A Quick Primer', https://opendatastudy.wordpress.com/2016/04/03/offshore-tax-havens-and-beneficial-ownership-a-quick-primer/ ]} The commitment involved publishing details of beneficial ownership of UK-registered business owners via the Person with Significant Control register. The new commitment aimed to extend the register to companies that bid on public contracts and own or buy property in the UK. This stemmed from government and CSO concerns that London was being used to invest illicit money from overseas.

Status

Midterm: Limited

In March 2016, just before the beginning of the third action plan cycle, the government published a discussion paper looking for views on how to enhance the transparency of beneficial ownership.

The consultation was completed two months after the March 2017 deadline specified. In 2017, a new consultation paper asked for views on the register.^{[Note 2: Department for Business, Energy & Industrial Strategy, Overseas companies and other legal entities' beneficial ownership register: call for evidence, https://www.gov.uk/government/consultations/property-ownership-and-public-contracting-by-overseas-companies-and-legal-entities-beneficial-ownership-register]} The paper was published on 5 April 2017. Those consulted were asked to respond by 15 May 2017 and the government published its response outside of the timeframe in March 2018.^{[Note 3: Department for Business, Energy & Industrial Strategy, Overseas companies and other legal entities' beneficial ownership register: call for evidence, https://www.gov.uk/government/consultations/property-ownership-and-public-contracting-by-overseas-companies-and-legal-entities-beneficial-ownership-register; see also Department for Business, Energy & Industrial Strategy, The Government response to the call for evidence, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/681844/ROEBO_Gov_Response_to_Call_for_Evidence.pdf]}

The changes in law require primary legislation to alter property registration. Although the deadline for the milestone was April 2018, the Queen's Speech announcing the legislative agenda did not mention it.^{[Note 4: Cabinet Office (2017), The Queen's Speech 2017, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/620838/Queens_speech_2017_background_notes.pdf ]}

End of term: Substantial

In January 2018, the UK government committed to a 12-month timetable for legislation. In 2018 the government announced that it^{[Note 5: The Guardian (2018), May to set timetable to reveal foreign owners of UK property, https://www.theguardian.com/politics/2018/jan/17/theresa-may-set-timetable-reveal-foreign-owners-uk-property; also House of Lords (2018) Sanctions and Anti-Money Laundering Bill [HL] - Third Reading, https://www.theyworkforyou.com/lords/?id=2018-01-24a.1024.2#g1024.3; and UK Public Register of Overseas Entity Beneficial Ownership: Written statement - HCWS425, https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2018-01-24/HCWS425/]} intends to legislate to establish a public register of beneficial owners of non-UK entities that own or buy UK property, or participate in UK Government procurement.^{[Note 6: UK government (2018), UK Public Register of Overseas Entity Beneficial Ownership: Written statement - HCWS425, 48th January 2018, https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2018-01-24/HCWS425/; and UK government (2018) ‘Draft registration of overseas entities', https://www.gov.uk/government/consultations/draft-registration-of-overseas-entities-bill ]} The word ‘establish' could be taken to mean putting into operation or setting it up.

The new draft register bill was published on 23 July 2018, after the April 2018 deadline set forth in the action plan. It was left open for consultation until September 2018.^{[Note 7: DBEIS (2018), Overview Document: Draft Registration of Overseas Entities, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/727901/2._FINAL_Overview_document__1___1_.pdf]} Though the commitment did not specify an end date for the operation of the new register, the government committed to having a register in place and operational by 2021. Some critics in the Labour Party felt the date was too far into the future and lobbied for a closer one.^{[Note 8: The Guardian (2018), May to set timetable to reveal foreign owners of UK property, https://www.theguardian.com/politics/2018/jan/17/theresa-may-set-timetable-reveal-foreign-owners-uk-property]}

Did It Open Government?

Access to Information: Did Not Change

Civic Participation: Did Not Change

The policy aimed to open a new area of private sector activity and ownership to public scrutiny. Though estimates vary on the exact size, it is likely a new register would make transactions worth billions of pounds much more transparent, especially given the size and importance of the London property market.^{[Note 9: Transparency International Faulty Towers: Understanding the impact of overseas corruption on the London property market, http://www.transparency.org.uk/publications/faulty-towers-understanding-the-impact-of-overseas-corruption-on-the-london-property-market]} However, at the time of writing this report, the primary legislation was not yet passed, and the establishment of the secondary register fell far outside the timeline of the two-year plan. At the final time of writing, the draft bill is being considered by a joint parliamentary committee. Therefore, this commitment has not yet resulted in any changes.

Carried Forward?

Given the lengthy timetable for implementation, the commitment will continue. Commitment 6 of the UK government's draft ideas for its next action plan (2018-2020) seeks to ‘improve compliance, coverage and quality of publication to Contracts Finder so that all above threshold public contracts can be tracked from planning to final spending'. This will involve using the register data itself, and connecting it to open contracting through, ‘improving the use and validation of organisation identifiers will help to provide a view of government business with specific organisations and will help identify the geographic origin and beneficial ownership of those organisations.'^{[Note 10: UK Government (2018), Consultation draft of the National Action Plan for Open Government 2018 – 2020, https://docs.google.com/document/d/1XGUs6X8EHSOm00U-rX2_8cAoq7MnDsBjnetQeW0vnzA/edit#heading=h.y5i6179pcs8d ]}