'(1) A serious crime prevention order against a body corporate, partnership or unincorporated association may authorise a law enforcement agency to enter into arrangements with—
(a) a specified person; or
(b) any person who falls within a specified description of persons;
to perform specified monitoring services or monitoring services of a specified description.
(2) A person with whom the agency has entered into arrangements in accordance with such an authorisation is known for the purposes of this section as an authorised monitor.
(3) A serious crime prevention order which provides for an authorised monitor may, for the purpose of enabling the performance of monitoring services, impose requirements of the type mentioned in section 5(5) as if the references in paragraph (a)(iv) and (b)(iv) of that provision to a law enforcement officer included references to an authorised monitor.
(4) A serious crime prevention order which provides for an authorised monitor may require any body corporate, partnership or unincorporated association which is the subject of the order to pay to the law enforcement agency concerned some or all of the costs incurred by the agency under the arrangements with the authorised monitor.
(5) Any such order—
(a) must specify the period, or periods, within which payments are to be made;
(b) may require the making of payments on account;
(c) may include other terms about the calculation or payment of costs.
(6) The tests for making or varying a serious crime prevention order in sections 1(1)(b), (2)(b) and (3), 17(1) and (2), 19(2), (4) and (5), 20(2) and (4) and 21(2) and (4) do not operate in relation to an order so far as the order contains terms of the kind envisaged by subsections (4) and (5) above (or by subsection (1) above for the purposes of those subsections).
(7) But a court must not include in a serious crime prevention order (whether initially or on a variation) terms of the kind envisaged by subsection (4) or (5) unless it considers that it is appropriate to do so having regard to all the circumstances including, in particular—
(a) the means of the body corporate, partnership or unincorporated association concerned;
(b) the expected size of the costs; and
(c) the effect of the terms on the ability of any body corporate, partnership or unincorporated association which is carrying on business to continue to do so.
(8) A law enforcement agency must inform the subject of a serious crime prevention order which provides for an authorised monitor of the name of, and an address for, any person with whom the agency has entered into arrangements in accordance with the authorisation in the order.
(9) Nothing in this section affects the ability of law enforcement agencies to enter into arrangements otherwise than in accordance with an authorisation under this section.
(10) In this section—
"law enforcement agency" means—
(a) a police authority or the Northern Ireland Policing Board;(b) the Serious Organised Crime Agency;(c) the Commissioners for Her Majesty's Revenue and Customs; or(d) the Director of the Serious Fraud Office;
"monitoring services" means—
(a) analysing some or all information received in accordance with a serious crime prevention order;(b) reporting to a law enforcement officer as to whether, on the basis of the information and any other information analysed for this purpose, the subject of the order appears to be complying with the order or any part of it; and(c) any related services; and
"specified", in relation to a serious crime prevention order, means specified in the order.'.— [Mr. Coaker.]
Brought up, and read the First time.
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With this it will be convenient to discuss the following:
Government new clause 2— Costs in relation to authorised monitors.
Government amendment No. 15.
In his report, "Regulatory Justice: Making Sanctions Effective", Professor McCrory advocated that
"regulatory sanctions were consistent with, and appropriate for, a risk based approach to regulation, as set out in recommendation eight of the Hampton Review. The Hampton Review recommended that the penalty regime should be based on the risk of re-offending and the impact of the offence...with tougher penalties for rogue businesses that persistently break the rules."
There is a significant read-across between the approach that he advocates and the innovative and targeted approach to involvement in serious crime that we are proposing in the amendments. We have already discussed the fact that businesses are increasingly used by serious criminals as the means by which they, for example, launder money or attempt to disguise activities such as people-trafficking or drug-trafficking. Businesses can be in more than one place at a time, they can have complicated legal structures and they can carry out exceedingly complex business and large amounts of transactions on a daily basis. All those things make them very difficult to interdict for their involvement or use in serious criminal enterprises.
The Serious Organised Crime Agency, the Serious Fraud Office, Her Majesty's Revenue and Customs and the rest of the law enforcement community are constantly developing and using innovative approaches to dealing with this problem. They are having significant successes and should be commended. However, the inexhaustible potential for using businesses in different ways to further serious criminal ends means that that work is not always enough.
The amendments will mean that, for example, where a business has been proved to be involved in serious crime, an order can require it to provide its accounts or other information to an authorised monitor, to ensure that it complies with a requirement not to conduct its business in a particular way. That will be effective where the information is particularly complex and where someone such as a forensic accountant will be able to make a far better assessment than a law enforcement agency of the way in which the business is conducting itself. If the court authorises a law enforcement agency to employ a monitor, it can go on to provide, as a term of the order, that the organisation that is the subject of the order must pay the costs that the law enforcement agency incurs in employing the authorised monitor. That effectively increases the regulatory burden on a business because it has been proved to be involved in serious crime. The provisions target regulation in a risk-based manner, and mean that burdensome regulatory approaches do not have to be taken to deal with the few bad apples in any business area. Regulation does impose a cost on business, but we can all agree that this is better than the results of no regulation at all.
The Minister has talked about the application of the orders and the way in which they would need to be monitored, and I understand his point about the complexity of corporate structures and how businesses might be used. Will he explain, however, whether the orders will require the recipient to have knowledge that they have committed or been involved in a serious crime? There could be a risk that someone unknowingly involved in such a crime could be the subject of an order and have to pay the cost of the monitoring.
We went through that debate at great length in Committee. The applicant authority would have had to go to court over any organisation that was the subject of a serious crime prevention order. Only in circumstances where someone had either encouraged or facilitated a crime would they be made the subject of a serious crime prevention order. The hon. Gentleman's point would have been considered by the court before deciding whether to apply the order. There is the potential, in appropriate circumstances, for there to be a burden on the business concerned, but that is to be preferred to the potential cost of having to regulate an entire sector.
The provisions include a safeguard whereby the courts will impose a requirement to pay costs only where it considers it appropriate to do so. In reaching that decision, it will have regard to the means of the body corporate, partnership or unincorporated association concerned; to the expected size of the costs; and to the effect of the terms on the ability of any body corporate, partnership or unincorporated association that is carrying on business to continue to do so. That provides a strong steer to the courts to ensure that the orders are used only where the overall effect on the business is not such as to cause damage to it as an ongoing concern.
The Minister talks about the assessment of the costs of the order and of the monitoring. How is it likely to be presented to the court and what scope would there be for any re-assessment of such costs, which, at the outset, may not be readily calculable when the court is considering the matter?
As the hon. Gentleman will know, the practical arrangements for deciding how costs are to be arrived at will be done through order. It is one important aspect of the order making power, so as it goes through, we need to consider the practical consequences, how costs will be apportioned and what amounts are appropriate. The important point in respect of the primary legislation, however, is the existence of safeguards for any business, organisation or partnership—and they are set out in the provisions. As I have explained, we want to ensure that businesses made subject to a serious crime prevention order by the courts abide by the terms of that order. By the use of a forensic accountant or other suitable professional, we want to ensure that businesses comply, but we do not want to do so in a disproportionate way—hence the safeguards that I have outlined. I rather think that the hon. Gentleman knew the answer to his question before he asked it: costs will be subject to the order making process.
The new clause strikes an appropriate balance between the need to ensure that businesses are not used by serious criminals and the need to ensure that the business sector as a whole is not damaged by measures designed to combat the few. I thus commend the new clause to the House.
The first thing to note about new clause 1 and the accompanying new clause 2 is that they are obviously very late in consideration. Given what the Minister has said about their importance and necessity, it is surprising that we are considering these proposals on Report—after the entirety of the Bill has already been examined.
I acknowledge what the Minister has said about the complexity of what is involved. I accept that in serious and organised crime, criminals will go to great lengths to ensure that their true purpose is disguised and that different corporate structures may be used to try to hide criminal activity. On the face of it, whatever the merits of serious crime prevention orders—we will come on to debate them later—if they are to apply and be effective, there is clearly a need for monitoring to ensure that their terms are adhered to. Without proper monitoring the orders will be ineffective, because it will not be known whether they have been breached and whether the appropriate sanctions should apply. I realise that the position is complex and that on the face of it there is a need for experts to be involved, but the new clause leaves a good deal of room for improvement.
I want to raise a few points on which I have sought elucidation from the Minister. The key point is that, while a person or corporate body subject to a serious crime prevention order would need to appear before a court, that person or body would not necessarily have committed a serious offence, but would only have had to be involved in a serious crime. We shall discuss that more fully during our wider debate on the orders themselves.
It might be said that involvement in a serious crime indicated a direct link and was therefore extremely important, but the wording of the Bill suggests that the link may be somewhat more indirect. Clause 2(1)(b) and (c) make it clear that such involvement could include a person's facilitating the commission of a serious offence, or conducting himself
"in a way that was likely to facilitate the commission" of a serious offence. There is no requirement for intention in those circumstances. Indeed, clause 4(2) imposes what is almost a reverse burden of proof on the person who is potentially subject to an order, who must show that his actions were "reasonable in the circumstances".
The Minister said that only about 30 orders a year would be issued, and that has been stated consistently and clearly throughout the review of the draft legislation. What is not clear is whether this measure is really about the Mr. Bigs or whether it is likely to be used far more widely than the Minister intends, purely because of the way in which it is drafted. That is worrying in this context and a number of others. Notwithstanding possible assurances that the measure is supposed to be limited and to attack only the very central figures, it could be interpreted as allowing peripheral figures who, despite having no direct intention and no direct knowledge that they have facilitated or been engaged in facilitating serious crime, may find themselves subject to a serious crime prevention order—and, subsequently, to another order requiring them to pay for the monitoring of their compliance with it.
That potential injustice leaves me extremely uncomfortable with the ambit of the new clause, despite the Minister's statement that it is intended to focus only on a very small group of corporates, and to ensure that forensic accountants and experts are brought in to aid the monitoring, enforcement and interpretation of the orders. That second aspect—cost—strikes me as extremely important. I have already described the legislation as wide ranging and potentially draconian. New clause 1(4) states
"A serious crime prevention order which provides for an authorised monitor may require any body corporate, partnership or unincorporated association which is the subject of the order to pay to the law enforcement agency concerned some or all of the costs incurred by the agency under the arrangements with the authorised monitor."
It goes on to state that payments on account may also be required, which effectively means that payment must be made in advance of the monitoring.
As we have heard from the Minister, it is unclear how those costs will be assessed; in essence, they will be drawn in through secondary legislation. It is also unclear how the court will determine those costs and, therefore, the impact on the business concerned. He has tried to point out the protections in new clause 1(7), which is intended to give the courts a particular role in assessing the relevant circumstances, examining
"(a) the means of the body corporate...
(b) the expected size of the costs".
The provision also deals with the effect that the order and the monitoring would have on that body corporate.
We do not know what those costs will be, how they will be assessed and how they will be measured. The court will be put in a difficult position in assessing the impact of the order on the body—the company or business—because it will have to undertake a detailed examination and review of the finances, the business and the way in which the company operates to assess whether the order would have a particular effect and whether it would risk the bankruptcy, liquidation or winding up of the company. That will be a hard decision for the court to make, particularly given that it will have to make an assessment of costs that may subsequently change.
I am sure that the Minister will say that the Government will set out in the order what the compliance should be, what the terms of the order are and therefore why there is a need for monitoring, but difficulties are involved. Given my professional background, I know that sometimes the costs that one is given in advance may not end up being the costs that arise. The monitor—this expert—will have to make a judgment about what is involved and what its own professional costs are likely to be in seeking the order in the first place.
The court will be in a difficult position. How will it go about assessing the costs and the impact when it may have limited information on that body corporate? It will clearly not have a full understanding of how that company conducts its business, the pressures on it and the market conditions. This provision could have a significant adverse impact on businesses if a wrong judgment is made, with the best of intentions, based on information that is not complete at the time that a monitoring condition is applied. We could risk creating injustice, particularly if an order was granted against a company whose involvement was peripheral, not intended, not direct and almost without knowledge, even though the court may have been able to show that it should have taken some other action and that is why it is brought within the scope of the serious crime prevention order in the first place.
New clause 1(6) deals with the tests for making serious crime prevention orders. The Minister will be familiar with our debates on Second Reading and in Committee about harm reduction versus punishment. He has said on many occasions, as I am sure he will say this afternoon and this evening, that the Bill is only about harm reduction—it is about preventing serious crime—and that it is not about punishment. One can form one's own judgment about whether that is the reality in the Bill, but subsection (6) raises interesting questions that deserve greater scrutiny.
Does the hon. Gentleman see a distinction, as I do, between using these powers to restrict the freedoms of people whose prison sentence has been spent but who have been convicted of an offence, and using them in a preventive capacity in respect of people who may never have been convicted of any offence?
Well, there is an issue in the way in which civil orders can be used for crime prevention. The hon. Gentleman is right to highlight the fact that the orders can be used in two separate ways. One is almost as a post-bail or a post-conviction prevention order, in which the intention is almost to get someone back behind bars as soon as possible by virtue of a breach. That is a criticism that has been levelled at some of the other civil orders that the Government have introduced. The other is use of the order before any criminal conviction has been obtained, and that raises issues of appropriateness, especially when the criminal law could be applied and some sort of criminal sanction invoked. That is a point that we will debate in greater detail when we reach serious crime prevention orders later.
New clause 1(6) states:
"The tests for making or varying a serious crime prevention order"— it then lists various sections—
"do not operate in relation to an order so far as the order contains terms of the kind envisaged by subsections (4) and (5) above."
In other words, monitoring should occur. The particular parts of the Bill that are being carved out by that provision are those to do with preventive measures. For example, I draw the Minister's attention to clause 1(1)(b), which provides that the court may make an order if
"it has reasonable grounds to believe that the order would protect the public by preventing, restricting or disrupting involvement by the person in serious crime in England and Wales."
In other words, that limb—the necessity for the court to be satisfied that the order would prevent crime—would be carved out by new clause 1(6). That is a bit odd, if the intention is to prevent, rather than to punish. That is an important point for how the orders are used and, in terms of the European convention on human rights, to ensure that the Bill is not construed as providing for punishment. It is essential that the orders should be preventive, not punishment, but new clause 1(6) would take out all the relevant provisions on orders that will have a monitor granted to them. That is perverse and bizarre and, when the Minister winds up, I trust that he will give some explanation of it.
The way in which the provision is drafted suggests that it may also apply to the whole of the serious crime prevention order, rather than just to the monitoring aspects. That would make the orders very wide and draconian in their application in the particular aspects. The late inclusion of this wide-ranging new clause raises many questions, and it has not had proper scrutiny and debate.
The hon. Gentleman made a reasonable point about the application of new clause 1(6), but then made the wild assertion that it would apply to serious crime prevention orders as a whole. If he reads further, he will see that it is limited to the new clause, and does not apply to the whole Bill.
"in relation to an order".
While it may continue
"so far as the order contains terms of the kind envisaged by subsections (4) and (5) above", it does imply that it could apply to orders more generally. However, I welcome the Minister's intervention to make it clear that the provision is intended to deal only with the monitoring aspects, not the aspects of wider concern. Even so, in terms of monitoring, surely the orders should be intended to prevent crime. Otherwise, why are they there? He has said that the provision is not intended more generally, but it is still questionable whether the removal of the sections in question will cause problems with compliance with the European convention on human rights. Perhaps he can reflect on that point in further detail when he winds up.
The Minister said that the costs will be dealt with in secondary legislation, so we do not yet know how they will be assessed. How will appeals against the costs work? New clause 2 states that costs could be subject to appeal, and that
"Such provision may, in particular, include provision about appeals."
Can the Minister shed any more light on the Government's intentions relating to appeals against costs? The costs could be significant and the regulations could have a damaging impact on businesses.
The proposals note that the steps an enforcement agency can take to recover costs will also be covered by secondary legislation, but again the Minister has not talked in great detail about the Government's intentions in that regard. Will the relevant enforcement agencies have the right to bankrupt and wind up a company that is unable to pay for monitoring costs—however damaging their impact might be?
The Government have decided to introduce these provisions hurriedly at a late stage, and there is a lack of detail in terms of costs, how the courts will assess companies, whether appeals against the costs will be allowed and how they will operate, what the time scales will be and what the rights of challenge will be. Once the costs are in place, what rights will enforcement agencies have and how will they operate in practice? What discretion will the agencies have in recovering the costs?
I accept that if costs are levied it is right, on the face of it, that the company should pick them up, but there is a duty on law enforcement to deal with its monitoring. The proposals could place a significant burden on companies and the House is not yet clear about the context for the provisions or their scale and nature. Based on the information we have been given, I remain concerned about the risk of injustice due to the lack of clarity and certainty in new clauses 1 and 2.
I am grateful for the opportunity to speak briefly on new clause 1.
I echo the concerns that have just been expressed about the introduction of such wide-ranging and important provisions at this stage of our deliberations. We had opportunities for exhaustive discussion of the Bill in Committee, when we went through it in great detail, so it is alarming that new provisions are being introduced in this way.
Three aspects of the new clause give me cause for concern, and I shall be interested in the Minister's response. The first is that the provision is extremely wide-ranging. It shines a light on a larger concern about the Bill as a whole, which is that there are conflicting stories about the number of people who will be caught up by the provisions.
In Committee and in his speech today, the Minister was keen to stress that the provisions will apply to only a small number of people. Those assurances are not in writing in the Bill, but the background mood music is that we need not be overly concerned that the provisions will be routinely applied, as they will catch only a small number of particularly burdensome criminals. None the less, representations to me from agencies and others who are broadly supportive of the measure make much more extravagant claims about its impact on my constituents. If 30 or 40 people a year are caught up by the provisions, it is unlikely that any of them will be my constituents. Of course, there will be a knock-on effect in terms of the impact that is caused, but it would be interesting to know how many people are likely to be caught by these provisions. Although there is a point of principle, a matter of degree also applies, and so far, that is not at all clear.
The second point that gives cause for concern is that the specific people are not defined in the Bill. Therefore, it is difficult to understand how, when such services are contracted out to various outside agencies, checks and balances will be in place to ensure that the powers are wielded responsibly and in a way that would satisfy an elected representative, such as myself.
The third issue that gives me cause for concern—I would be interested to hear the Minister's response—was raised by James Brokenshire and relates to the obligation on the subject of the order to pay the costs. That could be a very serious sanction against someone who has not necessarily committed a criminal offence. I would be interested to know whether the Minister felt that there could be a cap on those costs. I ask him for more detail on how he thinks that will work in practice.
I am grateful to James Brokenshire for recognising the complexity of the Bill and for, quite frankly, the decent way in which he admitted that fact. Some of these provisions are very technical, complex and difficult. That is why some of these amendments are being debated on the Floor of the House. I make no apology, however, for introducing something that will significantly improve the Bill. It would be somewhat ridiculous if, because I might be embarrassed about the fact that the hon. Gentleman would complain about such late additions to the Bill, I did not introduce amendments that improve it and make a significant difference to it. All I can say to the hon. Gentleman is that I apologise for the late introduction of new clause 1 and to the House for the lateness of some of the amendments, but I do not apologise for the fact that provisions, such as new clause 1, will make a significant difference and are significant improvements to the Bill, and it is therefore important that we debate them today.
The Minister says that he believes that new clause 1 will make a significant difference. He has also said that, in essence, about 30 such orders will be granted a year. How many orders does he think will be granted subject to the monitoring requirements set out in these new clauses?
I do not know the answer to that, but the serious crime prevention order as laid out in the Bill should be available to the courts. That will be a matter for the courts, and it will be for the applicant authorities to go to the courts where they think it appropriate and where they think that a serious crime prevention order will seriously impact on crime. With respect to new clause 1, the inclusion of authorised monitors is important because it will make the serious crime prevention orders more effective, as they apply to businesses and organisations. Let me suggest to the hon. Gentleman and to Mr. Browne that I would have thought that all of us are united in wanting to ensure that serious crime prevention orders imposed on businesses and organisations are enforced and made to work, so that we can all see that they have credibility, and the use of authorised monitors will ensure that the terms are agreed to and, importantly, complied with.
The hon. Member for Hornchurch talked about complexity. I said in my introductory remarks that businesses might want to use the complexity of the arrangements to hide accounts, transactions or what they are doing. That means that law enforcers will at times need the experience, ability, knowledge and skills of forensic accountants, who can scrutinise the accounts in a way that many law enforcers cannot. That means that the serious crime prevention order will prevent the serious crime that we are talking about. When such an order is made, we will be able to ensure that the terms are agreed with.
He talked about the arrangements relating to costs. Of course, the courts will consider the costs when making an order. If the costs change, it is open to the subject to apply to the court for variations to the costs set out in the order.
The hon. Gentleman raised a point about bodies knowing whether they are subject to an order. An organisation will either have to be represented at proceedings, or be sent a notice by recorded delivery or hand delivery, before the order takes effect, so they will have knowledge of the order and its terms. As he will remember, if an organisation's actions are reasonable, those actions cannot form the basis of a finding that it has acted in a way that has facilitated, or is likely to facilitate, serious crime. The burden is on the organisation to prove reasonableness, because the organisation is best placed to know the background to its actions. If an applicant authority wants to make a body the subject of a serious crime prevention order, that body can use a defence of reasonableness in court. We went through that many times in Committee, as he knows. If the organisation can demonstrate that its actions were reasonable to the satisfaction of the courts, it will not be made the subject of a serious crime prevention order.
As the hon. Gentleman will know, it is for the court to assess the evidence before it, as is the case for courts in all sorts of situations, and it is for the court to decide whether an organisation has acted reasonably under the group of new clauses that we are discussing. That is the protection against the injustice that the hon. Gentleman talked about.
The Minister highlighted the point about the assessment of the court, but that is really a question of the information presented to the court. It may not be presented with a full picture. He chided me for criticising him for the late notice of the new clauses, and our late consideration of them. What discussions has he had with the Law Society, or similar third parties that are acutely involved in considering the provisions, given that the provisions are complex, and will sit on top of an already complex situation? The complexity of the new provisions causes me concern because of the potential injustices that may arise as a result of it.
I apologise if I chided the hon. Gentleman too harshly; I did not mean to. He will know that we are taking forward the amendments as a result of the Hampton review and the Macrory report. They pointed out the need for appropriate and proportionate regulation, and that is what we have ensured. The hon. Gentleman talked about new clause 1(6), which switches off the test in clause 1(1)(b), and asked what the justification was for that measure. It is difficult to show that authorised monitors would directly prevent serious crime, but it is important to ensure that the parts of the order that would directly prevent serious crime are complied with. That is why we included the authorised monitors in the provisions.
The hon. Gentleman asked whether the Bill complies with the European convention on human rights. He will have seen my statement on the subject but, again, I refer him to the protections in the new clause, which ensures that a court cannot appoint an authorised monitor to supervise a serious crime prevention order without taking into account certain circumstances, particularly those in proposed new subsection (7)(c), which refers to
"the effect of the terms on the ability of any body corporate, partnership or unincorporated association which is carrying on business to continue to do so."
In other words, if a serious crime prevention order is served on an organisation, and if an authorised monitor is used to ensure compliance with the order, the court must ensure through proposed new subsections 7(a), (b) and (c), that the measure is proportionate and takes into account the ability of the organisation or partnership to comply with it. With those comments, I urge the House to support the new clause.
Question put, That the clause be read a second time:—