Mike O'Brien (Solicitor General, Law Officers' Department; North Warwickshire, Labour)

Mr. Amess, it is a pleasure to introduce clause one, which introduces the new general offence of fraud. It establishes the three ways in which the offence can be committed. These are fraud by false representation, failing to disclose information and abuse of position. The new offence will extend to England and Wales and Northern Ireland. It will have a maximum custodial sentence of 10 years. The new offence closely follows proposals set out in the 2002 Law Commission report on fraud, which concluded:

“The existing legislation was deficient in a number of respects.”

The over-particularisation of the deception offences in the Theft Act means that it is possible for some behaviour to fall outside the statutory offences. Therefore, defence lawyers can argue that it may have been some form of deception but it was not that precise form of deception. The prosecutors have charged the defendant with the wrong offence.

There is the risk that the offences are going to result in unjustified acquittals and costly appeals. The reliance on deception, as an essential ingredient of the crime, is problematic if it is not always clear that there is a victim who has been deceived. For example, a shopkeeper may have accepted a credit card for a payment not knowing, or being indifferent to, whether the cardholder has the authority to use the card, provided that the transaction results in the shopkeeper being paid, which it normally would.

The Law Commission concludes that the laws of fraud could be improved by the introduction of a general offence of fraud. A general law would improve the prosecution process, first by reducing the chances of offences being wrongly charged. Secondly it would, by virtue of its simplicity, be fairer to citizens who might face a trial and would better be able to understand the law. Thirdly, it would provide a greater flexibility to keep pace with the increasing use of technology in crimes of fraud.

The proposals for this offence were widely welcomed during the consultations undertaken by the Government and will improve the law of fraud by moving away from the existing patchwork of deception offences towards a clearer definition of fraud. The simplified and rationalised fraud offence will provide those working on the frontline with the necessary tools to be able to tackle fraud more effectively.

Dominic Grieve (Shadow Attorney General & Shadow Spokesman On Community Cohesion, Law Officers (Assist the Home Affairs Team); Beaconsfield, Conservative)

May I first of all apologise for removing my jacket without permission? I made an assumption of your benevolence that I should not have made, although I am delighted that having done so, I was not ticked off. I thank you for that. Broadly speaking, I welcome the new offence of fraud and have no doubt that the Solicitor-General is right in what he says about the necessity of having such an offence. I also welcome the manner in which the Law Commission put forward the proposals. The Government have followed those proposals inclause 1 and I have every reason to welcome what has been done.

If I was to flag up a concern, it would be one that will become clearer a little further on in the Bill, when we come to fraud by abuse of position. But it is also worth highlighting it as this stage. As the Solicitor-General rightly says, one of the consequences of what we are doing is dealing with the problem of the victimless crime.

Although little crime is victimless, my experience of fraud cases—in particular, one long fraud trial in which I was involved—was that, as the Solicitor-General has highlighted, the prosecution case collapsed precisely because it was unable to show upon whom the false representations had been operated. As I was appearing for the defence I suppose I was jolly glad about this.

The case was one of mortgage fraud. The nature of the crime was that fictitious applications were being made for mortgages in the names of all sorts of people who did not exist, or front individuals were being used to apply for mortgages. But the mortgages all related to real properties. As the case proceeded, it became quite clear that those operating in the building societies at a time when the market was entirely buoyant and was rising spectacularly could not have cared less where the applications for mortgages were coming from. As far as they were concerned, they knew that the lending was secure on the property; therefore, the fact that the circumstances in which this information was coming to them was totally bogus was of no interest to them.

A cynic might have said that they were rather pleased to get the work; as they were all on bonuses according to the amount of mortgages that they were handing out and they knew that the lending was secure, they may even have turned a blind eye to the fact that the person submitting this large number of mortgages was in fact concocting the names of the people making the applications.

That illustrates precisely the sort of point the Solicitor-General and the Law Commission have highlighted and which clause 1 is designed to deal with. The sort of activity I have just described would be caught by the clause because, by its very nature it was a case of false representation and failures to disclose information about what was taking place.

I make that point to the Solicitor-General because as we look at the Bill in its entirety, we will have to be careful to try to ensure that we draw a dividing line between activity we wish to criminalise and activity that we might regard as morally reprehensible but which I have some doubts as to whether we would wish to make criminal. That comes to light particularly when we consider abuse of position. I highlight that now because it may be advantageous to look at it in terms of the broadest framework of the Bill before we move on to the specifics. To summarise, we are completely satisfied with clause 1 and with the broad thrust of the Bill, which merits support.

David Heath (Shadow Leader of the House of Commons & Shadow Cabinet Office Minister, Cabinet Office; Somerton & Frome, Liberal Democrat)

May I echo the closing words of the hon. Member for Beaconsfield (Mr. Grieve)? There is common agreement that the Law Commission has done an extremely good job in issuing its report and recommendations. Its argument for simplification and rationalisation of fraud offences is one that is difficult to argue against. As Griew noted about theft,

“No one wanting to construct a rational, efficient law of criminal fraud would choose to start from the present position. The law...is in a very untidy and unsatisfactory condition.”

That is a commonly held view. The conclusions are to be applauded not only because they provide clarity where there was a lack of it and because they provide offences that are comprehensive where there was a lack of comprehensiveness in respect of previous offences, but because there is a higher likelihood of successful prosecution when a simple test can be applied. At the moment, there is every opportunity for the defence to produce technical arguments in favour of acquittal that bear no relationship to the actual acts that took place. They are essentially legal arguments rather than arguments about fact. I support clause 1. It is a sensible measure.

I understand the point made by the hon. Member for Beaconsfield about the danger of having something so broad and encompassing that it covers behaviour that we may consider occasionally falls short of criminality, which nevertheless is not to be encouraged. When framing statute and offences, there is a difficulty whether we make them so comprehensive to ensure that criminal acts are without doubt caught within that compass or make them so particular that they fail to do that. There are arguments on both sides and we must accept that often we must make a compromise between those two positions and that a lot depends on the good sense of the prosecuting authorities in respect of what is put before a court.

When considering such matters, we must be extremely careful to make sure that we are not putting in the hands of prosecuting authorities an overbearing offence that can be applied improperly to those who are, in the judgment of most people, acting in a way that is worthy of opprobrium, but not criminal sanction. However, we shall be debating that matter later in the Bill. I welcome clause 1 and feel no need to amend it or argue against it.

Mike O'Brien (Solicitor General, Law Officers' Department; North Warwickshire, Labour)

I am grateful to both hon. Gentlemen for the way in which they set out their views. We can clearly deal with the abuse of position when we discuss the amendments. The Government considered some of the points raised, particularly whether there should be a broader offence in respect of fraud but, although a general offence should be created, there would be obvious risks in making it so broad that it would be imprecise and unclear about what would be covered by it.

The Government took the view that the Law Commission’s recommendation that there should be a general offence, with its specific limits categorised in the subsequent clauses that we shall come to, was the best way forward, and that we had therefore got the balance right. I am grateful to both main Opposition parties for saying that they, too, feel that the Law Commission and the Government have got that balance right.