My Lords, I beg to move that this Report be now received.
Moved, That the Report be now received.—(Lord Falconer of Thoroton.)
My Lords, before the noble Lord on the Woolsack puts the Question, does the noble and learned Lord have a faint feeling of embarrassment at the fact that out of the 232 amendments to be moved today and later, he is responsible for 130, or over half of them?
My Lords, the amendments that I shall move are constructive and will be welcomed by all. Therefore, I have no sense of embarrassment.
My Lords, in moving this amendment, I shall speak also to Amendments Nos. 2 to 6, 146, 221 and 222.
Amendments Nos. 1 to 6 are technical amendments that we have identified as being necessary to confirm the agency's status as a non-ministerial department and the director's employment status as a civil servant. They do not reflect any change in policy.
Amendments Nos. 1, 4 and 5 are required to confirm non-ministerial department status. Amendments Nos. 1 and 4 are needed because it is normal for the Minister for the Civil Service to have a formal role in determining the number of civil servants employed and their terms of employment.
Amendment No. 5 is required because a non-ministerial department must be funded directly rather than via the Home Office vote. The amendment makes provision to that effect. It also deletes the provision currently made for the agency's accounting procedures. As a non-ministerial department, the agency will automatically be subject to existing government accounting rules under the Government Resource and Accounts Act 2000 and no further provision is needed in the Bill.
The change will require a consequential amendment to the money resolution that was passed in October in another place. The Government will seek that when the Bill returns there after noble Lords have completed their consideration.
Amendments Nos. 2, 3 and 6 are needed in view of the director's intended status as a civil servant. The nature of the director's role—carrying out public functions on behalf of the state—is such that he will be a civil servant. Whether or not the head of a non-ministerial department is a civil servant depends on the nature of his functions and the relationship with Ministers.
The director of the Serious Fraud Office, the Director of Public Prosecutions and the chairman of the Inland Revenue are all civil servants. Although the heads of some other non-ministerial departments are not civil servants—the chief inspector of schools is one example—the director of the new agency will be more akin to the director of the Serious Fraud Office.
Amendment No. 3 deletes the reference to the director being added to the list of office holders who can be members of the Principal Civil Service Pension Scheme. As the director will be a civil servant, that provision is not needed. Amendment No. 2 requires formal approval from the Minister for the Civil Service of the terms on which the director holds office.
Amendment No. 6 deletes the reference to the director being added to the list of office holders who are disqualified from membership of the Westminster Parliament and the Northern Ireland Assembly. As a civil servant, he will automatically be disqualified from membership. In Committee, the noble Baroness, Lady Buscombe, moved amendments to disqualify the director from membership of the Scottish Parliament and the Welsh Assembly. I hope that she will accept that, as a result of these amendments, the director will now be automatically disqualified from being a member of those bodies.
Amendments Nos. 146, 221 and 222 will ensure that there is a proper basis for the secondment of police officers to the new assets recovery agency. Amendments Nos. 221 and 222 provide for the secondment of police officers from England, Wales and Northern Ireland to the agency on standard central service terms. Making the provisions will not require any officers to be seconded to the agency but it will ensure that they can be seconded on terms that protect their conditions of service in appropriate cases.
Amendment No. 146 makes provision in respect of the work that any seconded police officers will be able to undertake at the agency. Clause 1(5) provides generally that anything that the director is authorised or required to do may be done by a member of staff of the agency or a person providing services under arrangements that are made by the director if the director authorises them to do so. Clause 319(2) already makes one exception to that general provision as it prevents the delegation of the director's tax functions to persons providing services.
Amendment No. 146 will make a further exception in respect of seconded police officers. Those officers will be seconded on central service terms and will remain constables and retain their police powers. It will not therefore be appropriate to have seconded police officers working on civil recovery cases. The amendment simply provides that seconded officers will not be able to undertake civil recovery work on behalf of the director. I beg to move.
My Lords, I, too, have no objection to the amendments. I intended at this stage to make the same point as that raised by the noble Lord, Lord Ampthill. We are getting back to the bad old days of two or three years ago, when major Bills kept appearing with hundreds of government amendments. That has happened again on this occasion. It suggests serious overload on parliamentary counsel. I hope that we shall not see that happening again.
moved Amendments Nos. 2 to 6:
Page 267, line 13, at end insert "with the approval of the Minister for the Civil Service"
Page 267, leave out lines 14 to 17.
Page 267, line 28, at end insert "with the approval of the Minister for the Civil Service"
Page 267, line 30, leave out paragraphs 6 and 7 and insert—
"6 (1) These amounts are to be paid out of money provided by Parliament—
(a) the remuneration of the Director and the staff of the Agency;
(b) any expenses incurred by the Director or any of the staff in the exercise of his or their functions.
(2) Subject to anything in this Act any sums received by the Director are to be paid into the Consolidated Fund."
Page 269, leave out lines 12 to 20.
On Question, amendments agreed to.
Clause 6 [Making of order]:
My Lords, in moving this amendment, I shall speak also to Amendments Nos. 30, 32, 33, 58, 60, 61, 65, 82, 84 and 85.
I shall begin by concentrating on Amendments Nos. 7 and 65, which relate to Clause 6. This issue has been debated at length in your Lordships' House and another place. We continue to reiterate our deep concern about the Government's refusal to give the courts any discretion to decide whether or not to proceed with an investigation if an investigation is requested by the prosecutor. As currently drafted, an investigation is mandatory even if there are exceptional circumstances that justify its not being so. That, we believe, risks injustice. It is a denial of any safeguards and shows, we believe, a somewhat disturbing mistrust of our judges.
Our amendments seek to persuade the Government that there should be in the Bill an element of discretion whereby the court can intervene and prevent proceedings from taking place where there are exceptional circumstances that justify its not doing so, thus preserving a safeguard, albeit a minimal one.
I fully suspect that the noble and learned Lord the Attorney-General will respond by saying, as he did in Committee, that there are already sufficient safeguards in Clause 10. I must say that I disagree, particularly in view of the draconian powers contained in the Bill. The defendant is placed in the position of having to satisfy the court that there is a serious risk of injustice. The onus is on him or her rather than the prosecutor or the court. The introduction of exceptional circumstances at an earlier stage is in our view a fairer approach, which does not render the Bill unworkable or ineffective.
On the amendments relating to Clause 6 that were tabled by the noble Lords, Lord Goodhart and Lord Thomas of Gresford, the effect would be roughly the same. Amendment No. 8 and subsequent consequential amendments propose that if there is a serious risk of injustice, proceedings should stop there and then. The threshold is the serious risk of injustice. Our amendment is slightly different in that it expressly refers to "exceptional circumstances". If the Government are not prepared to agree that proceedings should stop when there is a serious risk of injustice, they should, we contend, be prepared to stop at "exceptional circumstances".
I view the amendments tabled by the noble Lords, Lord Goodhart and Lord Thomas of Gresford, as the wicket and our amendments as the long stop. If the amendments proposed by the noble Lords, Lord Goodhart and Lord Thomas of Gresford, are not acceptable, it would be quite absurd to refuse ours.
I turn to the amendment relating to Clause 75. The amendment, which was proposed by the noble Lords, Lord Goodhart and Lord Thomas of Gresford, and to which my name and that of my noble friend Lord Kingsland have been added, deals with the interpretation of a criminal lifestyle. The defendant has a criminal lifestyle if the offence concerned is, first, specified in Schedule 2 under the heading "Lifestyle Offences". In passing, I wonder whether they should be called "criminal lifestyle offences". However, that is clear, and we welcomed the schedule in Committee. Secondly, there is also a criminal lifestyle if it constitutes conduct forming a part of criminal activity or if it is an offence committed over a period of at least six months.
As I said, in Committee we welcomed the inclusion of Schedule 2. However, the list of offences is not conclusive. Notwithstanding that subsection (2)(a) of Clause 75 is clear, paragraphs (b) and (c) allow for a wider test; namely, for conduct forming part of a course of criminal activity or an offence committed over a period of at least six months.
Therefore, in spite of Schedule 2, which we welcome, the concerns remain as expressed by my honourable friend the shadow Home Secretary in another place and by myself concerning minor traffic offences leading to the label "criminal lifestyle" when we both spoke on the matter at Second Reading. Particularly given the Government's continued aversion to judicial discretion, we firmly believe that the taint of a criminal lifestyle should attach only where the course of criminal activity or the offences committed over a period of six months are punishable by imprisonment. I beg to move.
My Lords, the amendments in this group could have been dealt with as two different groups. The first group includes Amendments Nos. 7, 8, 37, 38, 65 and 66. Three are in the name of the noble Baroness, Lady Buscombe, and three are in my name. The second group includes Amendments Nos. 30, 32, 33, 58, 60, 61, 82, 84 and 85, all of which are in my name together with that of my noble friend Lord Thomas of Gresford and to which the noble Baroness, Lady Buscombe, and the noble Lord, Lord Kingsland, have now added their names.
The noble Baroness, Lady Buscombe, and I thought that it would be for the convenience of the House if the two groups were put down together for debate. They are both concerned with mitigating what we see as the draconian impact of the provisions in Clauses 6 and 75 relating to the question of a criminal lifestyle. As I said, the two groups contain somewhat different approaches.
The first group—that is, the one starting with Amendments Nos. 7 and 8—gives the court power to hold that a defendant does not have a criminal lifestyle, even if the conditions in Clause 75 are certified. The second group says that the offences needed under Clause 75 to constitute a criminal lifestyle must be either the specified offences or other offences which are punishable by imprisonment. Those are different points. They are not, in fact, inconsistent with each other, but each would serve to mitigate the impact of the criminal lifestyle provisions. If the Government could see their way to accepting either amendment, that could well temper the impact of Clauses 6 and 75 to a level that was tolerable.
With regard to Amendments Nos. 7 and 8, we believe that it is right to give the court some degree of discretion. We are not proposing that the discretion would be an absolute one in which the court would have power whenever it thought fit to dispense with the hearing of an application for a confiscation order. But, of course, the finding that a defendant had a criminal lifestyle would give rise to a substantial second trial—the criminal trial being the first. In the second trial, the defendant would have to prove effectively that any property held by him at the time of his conviction, or transferred to him six years or less before the start of the proceedings which resulted in that conviction, were not the proceeds of crime. That would not be easy.
Therefore, the application for a confiscation order is potentially oppressive. It puts a heavy burden on the defendant, even if ultimately he succeeds in proving that none of the property is the proceeds of crime. Surely it is right that the court is able to say, "We have heard what was said at the trial. We have heard what the prosecutor said in opening the application for a confiscation order, but we think that it would be unjust to the defendant to force him to defend his right to property." We say that the court should be able to say that the conditions of Clause 75 were technically satisfied but it would be unjust to require the defendant to go through the process of proving title to assets.
The Government can, of course, say, and no doubt will say, that the prosecutor or director have a discretion not to ask for a confiscation order. But surely it cannot be said that the prosecution will never exercise that power oppressively. The prosecution is not, in a real sense, an impartial party, and the judge, who is impartial, should have the power to stop the application for a confiscation order where it would be unjust to proceed.
Amendment No. 7 is very much to the same effect. It requires not that it should be unjust but that there should be exceptional circumstances. Both are directed at what would no doubt be the rare and unusual—but still possible— event of the prosecution acting oppressively in proceeding to ask for a confiscation order.
The alternative route involves restricting the power to find a criminal lifestyle to cases where offences can be punishable by imprisonment; that is, the three offences—the one which led to the conviction and the two prior ones within the preceding six-year period—which will, under Clause 75, lead to holding that a criminal lifestyle exists. We say that the power should be limited to offences punishable by imprisonment.
We are not suggesting that they should be indictable offences. We accept that some offences are triable either way. Indeed, a few which are triable only summarily could justify a finding of a criminal lifestyle. But if the offence is so minor that it can never lead to prison, then we believe that it should not lead to a confiscation order.
At one stage the Government gave the example of an offence which was not punishable by imprisonment but which could lead to a considerable gain by an offender. They gave the example of a developer who felled protected trees on a development site in order to make it easier to develop the land. That may be an example of a summary offence which may lead to a gain. It is an offence which is not punishable by imprisonment. But surely it is not the type of offence which should lead to the conclusion that there is a criminal lifestyle or which should lead to a confiscation order. Surely, the answer to a case of that kind is to make it possible to impose a much higher fine on the offender. That leads to a question which to my knowledge has not been raised in this debate, and on which I should like to hear the views of the noble and learned Lord the Attorney-General.
In the case given in the example, the offender may be—probably will be—a corporate body rather than an individual. The question is whether a corporate body can have a criminal lifestyle. That is an important question. Let us suppose that over a six-year period a major supermarket chain with hundreds of stores throughout the country is convicted on three occasions of minor infringements of food safety legislation from which it has benefited, perhaps to the extent of a few pounds. Does that mean that the chain has a criminal lifestyle? Certainly, if a corporate body is capable of having a criminal lifestyle, that would appear to be the case. That conclusion would be rather unwelcome to at least one noble friend of the noble and learned Lord the Attorney-General.
Equally, looked at from the other side, if a corporate body cannot have a criminal lifestyle, there is potentially a major loophole in this legislation. As a matter of ordinary English, I find it hard to see how any legal person can have a lifestyle without being a living and sentient being. That seems to me to be an important issue, which is unclear and which should be considered.
I return to the original point. We ask the Government to accept Amendment No. 7, which we would be happy to support, Amendment No. 8, or our own group of amendments to Clause 75 to make it necessary for an offence to be punishable by imprisonment. In the absence of that, we believe that potentially a serious injustice is waiting to emerge from this legislation.
My Lords, surely Amendment No. 7 raises an issue of principle, which I do not believe the Government have fully answered. It goes to the whole root of the question of the use of judicial discretion. Clause 6 and the powers to make the necessary confiscation orders and findings of criminal lifestyle can be implemented following an application by the prosecutor or the director—who, as the noble Lord, Lord Goodhart, said, are not neutral bodies in this matter—to ask the court so to proceed. If they ask it, the court has no alternative but to make that order or to proceed in that way, whereas if the order is not requested, the court still has a discretion on its own decision to proceed under Clause 6.
If it is right that there should be discretion in the court to proceed under Clause 6 even though an application has not been made, I cannot understand why equally there should not be a discretion in the interests of defendants to refuse to proceed under Clause 6, even if the application has been made, if the court thinks it unjust to do so. It seems to me that that is fair and reasonable and that that is what the Bill should say.
My Lords, I rise briefly to support Amendments Nos. 7 and 8, which give the court a discretionary "get out" clause. We have heard that Clause 75 specifies that one of the conditions of a criminal lifestyle shall be considered if the defendant is convicted of any of the offences within Schedule 2. Schedule 2 contains a wide range of offences, from serious issues such as arms trafficking and drug dealing to offences which are serious but could be the result of fairly minor convictions. I am thinking of the reference within Schedule 2 to copyright offences. In Committee I suggested instances where the defendant could have committed a relatively minor offence but must be considered to have a criminal lifestyle because that offence is specified within Schedule 2. The example I gave was of a student who might have made or dealt in an illicit recording; who might perhaps have illicitly copied a CD or video and distributed it to his or her friends.
When I raised that in Committee, the noble and learned Lord, Lord Goldsmith, drew our attention to the fact that dealing would have to take place. There would have to be a commercial basis. But what if that were the case and the theoretical student copied a CD on to cassette and distributed it among his friends for money? That individual may well be guilty of a copyright offence. But surely, if it were done on a minor basis, it would be absurd to say that that individual had a criminal lifestyle. Therefore, the court should have discretion in proceeding.
My Lords, there are three groups of amendments. They have been divided slightly differently by noble Lords, but all are on the theme of criminal lifestyle. I would divide them in this way. The first two groups of amendments are rather similar because the effect of both groups would be to prevent the criminal lifestyle procedures from being triggered under certain circumstances. Amendments Nos. 7, 37 and 66 would empower the court not to decide whether a defendant had a criminal lifestyle if it considered that there were exceptional circumstances. Where it decided to exercise its discretion, the court would not proceed to confiscate the defendant's benefit from his general criminal conduct. I assume that the court would still be required to confiscate the defendant's benefit from his particular criminal conduct.
Amendments Nos. 8, 38 and 66 would require the court to decide whether the defendant satisfied the criminal lifestyle test, but it would nevertheless be able to decide that he did not have a criminal lifestyle if it was satisfied that there would be a serious risk of injustice in so doing. Again, where the court exercised that power, there would be no attempt to confiscate the defendant's benefit from his general criminal conduct. However, as with the first group of amendments, the court would nevertheless be required to confiscate his benefit from his particular criminal conduct.
The effect of the third group of amendments is straightforward. The amendments would make it impossible for any criminal to be treated as having a criminal lifestyle where the offence or offences of which he had been convicted were not punishable by imprisonment. As the noble Baroness, Lady Buscombe, said, those areas have been covered both in Committee and in another place.
I shall start with the first two groups of amendments. Both those groups would dispose of one of the central policies of the Bill and as such would be wholly unacceptable to the Government. It is important that criminals know exactly what they expose themselves to in confiscation terms when they commit criminal offences. One of the great strengths of the Bill is that it makes clear when crimes will attract a criminal lifestyle regime and when they will not.
Introducing a discretionary power not to proceed, whether it refers to exceptional circumstances or to a serious risk of injustice, would do away with that certainty and introduce instead what the Government regard as an unnecessary subjective and discretionary element. It would also erase the consistency of approach that we hope to achieve across the jurisdiction, because courts up and down the land would almost certainly exercise the powers differently in cases that were not in fact materially different.
I anticipate that your Lordships would agree that the inconsistent application of justice is bad and undesirable. The Government do not consider either as a matter of principle. There can be either exceptional reasons for the court not to proceed or a serious risk of injustice in treating a defendant as having a criminal lifestyle. The criminal lifestyle regime has effect only where there is good reason to suppose that the defendant is living off crime. The tests have been carefully selected to catch only repeat offenders or those guilty of lengthy or inherently acquisitive offences. I am grateful again for the appreciation expressed by the noble Baroness, Lady Buscombe, at the schedule identifying those latter offences.
However, I remind your Lordships of the safeguards that can be relied on. First, the confiscation hearings are instituted only by the court or on the application of the director of the agency or the prosecuting authorities. The director and the prosecuting authorities are under a duty to act reasonably and will not mount hearings in inappropriate cases.
Furthermore, in a criminal lifestyle case, the court has power not to make the assumptions, if the assumptions—obviously—are shown to be incorrect or if there would be a serious risk of injustice. I give way to the noble Lord, Lord Goodhart.
My Lords, I need to consider that because normally, and in many cases, the decision of a prosecuting authority in the exercise of its discretion is not amenable to judicial review. I shall certainly consider the question and come back to the noble Lord.
In terms of the Human Rights Act, the prosecuting authorities are public bodies and subject to the duties under that Act.
I want to emphasise that the provisions of Clause 10(6) of the Bill, state that the court,
"must not make a required assumption in relation to particular property or expenditure if—
(a) the assumption is shown to be incorrect, or
(b) there would be a serious risk of injustice if the assumption were made".
That safeguard exists if the court considers it right or if the test of serious risk of injustice is made out in relation to particular property or expenditure. I beg to differ from the noble Baroness, Lady Buscombe—that is an important and valuable safeguard.
If the court therefore decides not to make the assumption, because it is shown to be incorrect or because there is a serious risk of injustice, the prosecutor or the director—whoever is bringing the case—will have to prove on a balance of probabilities every penny of the defendant's benefit.
For those reasons, shortly, the regime that has been constructed appears to us to be soundly based. I want to remind noble Lords of two matters. First, the idea that it is mandatory for the court to embark on a process of confiscation and mandatory in certain circumstances for it to make assumptions is not new to the Bill: it exists already in legislation.
I took the trouble to ask what was said in another place during the passage of the Drug Trafficking Bill 1993, which became the Drug Trafficking Act 1994. The then Minister—of course the Minister in the party of the noble Baroness—said, in referring to discretionary assumptions, that:
"During the six years in which the legislation has been in force, the courts have declined to apply the assumptions in a number of major cases, thereby placing the prosecution in the impossible position of being expected to prove matters in relation to the offender's property which are solely within his knowledge".—[Official Report, Commons, Standing Committee B, 8/6/93; col. 76-77.]
That reinforces an important point. The defendant will know where his property comes from; the prosecutor rarely will have that information.
The noble Baroness stated that the onus would be on the defendant to show a serious risk of injustice for the purpose of Clause 10(6)(b), to which I have just referred. But under Clause 16(4) the prosecutor must state if he has any information to suggest that there might be a serious risk of injustice if the assumptions are made.
I turn to the third group of amendments. One of the fundamental approaches to the Bill is to deal with the proceeds of crime on an "all crime" basis. In the context of criminal confiscation, that means both the benefit from any criminal conduct—summary or indictable—should be liable to confiscation and that any offence should be capable of triggering the criminal lifestyle provisions, provided that the specified criteria—repetition of offences and so forth—are satisfied.
In the criminal lifestyle schedules, the offences are both indictable and attract terms of imprisonment. The amendments exclude the possibility of an offender who satisfied one of the other tests being treated as having a criminal lifestyle where the offences did not attract a term of imprisonment, regardless of the duration and regardless of the number of times such offences had been committed. Therefore, to introduce what is proposed in these amendments would be to introduce a test which is no less arbitrary than the test proposed by noble Lords in amendments tabled earlier in the passage of the Bill; namely, that the triggering offences should each have generated a certain level of proceeds.
The tests which are set out in Clause 75(2)(b) and (c) are not designed to reflect the seriousness of the offences but the duration and repetition of the offences concerned. The fact that they have given rise to benefit is an indication that the defendant has a criminal lifestyle. As has been said before, it is the capacity of offences to generate benefit that drives the agenda, not their seriousness in other ways. Again, I remind noble Lords that a number of offences specified in Schedule 4 to the Criminal Justice Act 1998—that is existing confiscation legislation which provides for confiscation where there are certain repeat offences—also include offences which are summary only and which include no term of imprisonment.
So there is nothing new in including the possibility of offences which are summary and which do not carry imprisonment into this kind of legislation. That means that at the moment if two or more convictions are obtained, the magistrates' court has the power to make a similar confiscation order to the criminal lifestyle order under the Bill.
So we believe that allowing the third group of amendments would represent a weakening of the current powers of the courts. Two particular questions were raised. The first was by the noble Lord, Lord Goodhart, about a body corporate. A corporate body is a person and can have a criminal lifestyle, subject to the usual rules about showing the necessary mens rea, the necessary mental state, for the commission of offences. As the noble Lord says, to allow a vehicle to be used as the means of committing crime and gathering the proceeds of crime as a device for avoiding the implications and the safeguards in the Act would be wrong. So of course he is right to say that a corporate body should be covered. If a developer, for example, was repeatedly flouting local authority laws and making substantial profit, I respectfully suggest that it would be appropriate to apply the criminal lifestyle test where the prosecutor applied for it.
As he did in Committee, the noble Viscount, Lord Goschen, raised the question of copyright— in particular offences relating to commercial distribution. Today, he raised the example of a student. If a student were involved in such activity on a commercial basis, if he were engaging in the sort of crime that gives rise to substantial benefit—that is, piracy of intellectual property, counterfeiting and large-scale distribution—I think that the noble Viscount would agree that it is appropriate that he should be subject to that process.
It will always be possible to identify examples in which the prosecutor is most unlikely to proceed with an application. Whether it is the supermarket chain with three minor food safety convictions or a student doing something minor who gets himself on the wrong side of the provision because his activities are in some way termed commercial—although I cannot quite understand how that would happen—I should not expect the prosecutor to proceed. Earlier, I reserved the question of whether a decision could be judicially reviewed. The view of my advisers is that there could be judicial review of the prosecutor's decision to ask for a confiscation order. I suggest that the public interest is such that such an application would rarely be successful, but as the noble Lord, Lord Goodhart, raised the matter, there is an additional safeguard for him.
So all three groups of amendments would substantially undermine central provisions of the Bill. I therefore invite the noble Baroness, Lady Buscombe, to withdraw her amendment and the noble Lord, Lord Goodhart, not to press his.
My Lords, I thank the noble and learned Lord the Attorney-General for his response, although I am deeply disappointed by it. As I said in opening, these important matters of principle have been debated at length both here and in another place with good reason but, sadly, not to our satisfaction.
We are asking for a minimum safeguard to kick in in exceptional circumstances. We are concerned when the Attorney-General refers to the amendments introducing an unnecessary, subjective and discretionary element. Is introducing such an element into our criminal justice system so terrible? What is the Government's approach to the ability of the courts and the judges to decide, in exceptional circumstances, whether it is right for a prosecutor to be able to ask and, as a result of that simple question, for an investigation to take place?
There is a serious problem here. Let us turn the argument on its head. As drafted, the Bill provides that the court must make a confiscation order even if it is of the opinion that exceptional circumstances justify it not doing so. That cannot be right; no one could possibly agree with that.
Turning to the amendments to Clause 75 and the interpretation of "criminal lifestyle", it is clear that as drafted the tests are not designed to reflect the gravity of the offences but, as the Attorney-General said, to test the duration of the course of the criminal activity during which what may be very minor offences have been committed. We are genuinely concerned about that. I respectfully suggest that the weakness of the Attorney-General's argument was demonstrated when he said that in the case of three minor offences relating to food safety standards or a student copying music onto CDs, the Government would not expect the prosecutor to proceed. The point is that the prosecutor can proceed.
In Committee, the Attorney-General dismissed the prospect of the over-zealous and unreasonable prosecutor. But that may be wishful thinking. With the expected creation of financial targets for the assets recovery agency, there will be pressure on prosecutors unrelated to the merits and justice of each case. Nowhere is the dichotomy between criminal justice and revenue generation in the Bill so clearly in view. Surely it is only right for the judge, who has sole responsibility to determine these matters, to retain residual discretion.
We are deeply concerned about those issues. We are now at Report stage. By tabling amendments that would reserve opportunities for discretion to exceptional circumstances, we have been entirely reasonable and sensible. On that basis, I wish to test the opinion of the House.
My Lords, the amendments in my name—Amendments Nos. 10, 40, 68, 129, 142 and 211—have been grouped. After the balloted debate in your Lordships' House on 13th March, in which several of your Lordships, including my noble and learned friend Lord Wilberforce, participated, we had constructive discussions with the Minister's predecessor—the noble Lord, Lord Rooker—and with officials. I would have preferred it, however, if, along with the other amendments that he tabled for today, the Minister had produced some proposals on the subject of people trafficking.
I am sure that the Minister will agree that it is an appropriate moment to return to the issue of trafficking and to consider how the recovered assets of those involved in the trade might be used to help victims and combat the crime.
People trafficking, particularly trafficking in women and children, is a contemporary form of the slave trade, causing misery for the victims and their families and generating vast sums of money for the traffickers. It is worth commenting on the scale of the problem. Research commissioned by the Home Office on trafficking provides conclusive evidence that at a minimum, hundreds of women and children are being trafficked into the United Kingdom every year.
A report in the Financial Times published on 20th February stated that, according to the United Nations Office for Drug Control and Crime Prevention in Vienna, people trafficking has become the fastest growing facet of organised crime. Powerful criminal organisations are estimated to earn a staggering £4.3 billion per year from economic and sexual slavery. People trafficking is therefore considered to be the third largest source of profit for organised crime after the trafficking of drugs and firearms. The United States Department of State says that more than 175,000 women are trafficked annually.
There are numerous consequences. I should like to draw attention to the problems in West Sussex. Since 1995, 66 children who arrived unaccompanied in the United Kingdom have gone missing from West Sussex social services, the majority in the past two years. During Question Time in your Lordships' House on 13th June I sought information from the Government on the plight of those missing children and on reports that further children have disappeared this year. I have since been advised by the Home Office Minister Beverley Hughes that a further four young people have gone missing from that social services department in 2002. I am grateful to the noble Lord, Lord Bassam of Brighton, who is in his seat today, who responded to that question and arranged for that information to be provided.
Those disappearances took place in February. Of the four children, three were female and one was male. One of the females was Chinese and the other three young people were West African. The absence of comprehensive anti-trafficking legislation and adequate victim support services gives rise to such horrendous situations. I hope that the Minister will be able to say what more is being done to protect children in our care. It is an extraordinary state of affairs that children committed to care in this country, having been rescued from trafficking, should have gone missing on such a scale. I hope that the Minister will say something about their plight. What do we know of the outcome for those 70 missing children? Surely we must have some knowledge.
I welcome the Government's commitment to legislate in this area. The stop-gap offence of trafficking in prostitution in the Nationality, Immigration and Asylum Bill is an important start and one that I hope will be followed shortly by comprehensive anti-trafficking legislation as the Government have promised. People trafficking is included in the list of lifestyle offences in Schedule 2 to the Bill before your Lordships today. The offence referred to is in Section 25(1) of the Immigration Act 1971.
I am concerned that it is a relatively toothless provision. In a Written Answer, the noble Lord, Lord Filkin, acknowledged that,
"At present there is no specific offence of trafficking in human beings and so no data exist about the confiscation of assets of those engaged in this practice".—[Official Report, 18/6/02; col. WA 70.]
That will not do. Following that admission, I tabled two further Written Questions. The first highlights my concern that the offence of people trafficking in Schedule 2, paragraph 3 is wholly inadequate in combating it. The second seeks clarification as to whether the Proceeds of Crime Bill will be amended when new offences of people trafficking are introduced in forthcoming legislation, particularly the new offence of trafficking in prostitution in the Nationality, Immigration and Asylum Bill, which received its Second Reading yesterday.
Yesterday we debated one piece of new legislation that creates an offence of trafficking in prostitution, because the current legislation in that area is, as the Government admit, wholly inadequate. Yet today we are scrutinising another piece of legislation that refers to a specific lifestyle offence of people trafficking which is already in existence, which has been acknowledged to be ineffective in tackling the problem and which will be superseded in due course. To have such ambiguities in two pieces of legislation currently before your Lordships' House does not strike me as a good example of joined-up Government.
Despite those misgivings, the fact that the Proceeds of Crime Bill includes people trafficking as one of the lifestyle offences allows me to focus on the need to apply assets recovered towards anti-trafficking initiatives and support services for the victim. The Metropolitan Police Clubs and Vice Unit in London has seized over £275,000 from traffickers this year alone. Despite the growing scale of the people trafficking problem, support services for the victims of trafficking, both here and in the overseas countries from where women and young girls are taken, remain chronically underfunded. To the best of my knowledge and that of those working in this area, there is at present no central Government funding of services that seek to support and protect the victims if trafficked in the United Kingdom.
In a Written Answer dated 9th January, the noble Lord, Lord Rooker, advised me that Her Majesty's Government, in conjunction with the United Nations, national governments and non-governmental organisations, were working to address the problems of people trafficking and to provide support for the victims of this serious crime. I welcomed then the programmes currently underway in the Western Balkans region, in Southern Europe, and in the Greater Mekong region that covers parts of Cambodia, China, Laos, Thailand and Vietnam and in West Africa. They are vitally important in helping potential trafficking victims in their countries of origin to escape the cycle of poverty and desperation that forces them into the hands of traffickers.
A fortnight ago, my noble friend Lord Hylton and I, together with the noble Lord, Lord Ahmed, were in Azerbaijan looking at the problems of the million displaced people there. We heard firsthand accounts from people who had been offered work in so-called slave bazaars at the rate of 2.5 dollars per day for the most menial work. Is it any wonder that people trying to escape such destitution either arrive here as so-called economic migrants or are sold into the cycle of despair that becomes human trafficking?
I also wish to draw attention to the lack of funding for organisations based in the UK that seek to support and protect the victims of trafficking, perhaps better than we have been able to do in social services institutions such as the one I mentioned, from which 70 children disappeared. A housing association called Eve's Housing is the only organisation providing any help with accommodation for victims of trafficking. It has dealt with six cases in the past six months, all of whom were Albanian women.
Today I spoke with a lawyer who recounted the story of one Albanian woman. She was originally kidnapped, raped and forced into prostitution in Albania. She was then rescued by a man who fled with her to London, whereupon he forced her into prostitution. Her vulnerability was such that it took her four months to realise that the person she believed to be her potential saviour and protector was in fact simply out to exploit her.
Eve's Housing has taken upon itself to look after such vulnerable women by accommodating them in properties it manages. However, Eve's Housing receives no central government funding for doing this and so is clocking up bad debts as it helps those women. As far as the system is concerned, the women are asylum seekers and so are liable to be dispersed to different parts of the country without any regard for their special needs. The National Asylum Support Service does not have any system in place to offer specific advice and assistance to victims of trafficking.
Organisations such as Eve's Housing deserve central Government support. If assets seized from traffickers were properly applied towards services for the victims of trafficking, it would not only allow the victims to rebuild their shattered lives but could also help tackle the trafficking problem as it might lead to greater co-operation with the police.
We already have a precedent in transport where certain police forces are able to reinvest fines recovered from speed cameras into other traffic calming measures. Could we not achieve something similar in the Bill? If the Treasury has given the green light for reinvestment of resources from traffic offences involving motor cars, surely when it comes to trafficking in human beings we could apply the same approach—or is reinvestment in traffic calming to assume greater importance than investment in measures to prevent trafficking in young women?
A multi-agency group has been established in London involving police forces, the Immigration Service, social services, the Home Office and NGOs, which is seeking to achieve better co-ordination of operational activities and more effective support for victims, including the provision of safe houses. I have entered into correspondence with the Home Office on the matter and met with the noble Lord, Lord Rooker, and other Home Office officials on 20th May. They then advised me that the Recovered Assets Fund—RAF—can use seized criminal assets, including funds retrieved from traffickers, for a number of initiatives. Presently, the RAF is used, among other things, to support anti-drug initiatives through the funding of projects linked to the drugs White Paper, Tackling Drugs to Build a Better Britain. I understand that the police would support the direct use of recovered assets to establish a fund for victims of trafficking, but recognise that that would require a change in legislation. The police would therefore support appropriate applications to the Recovered Assets Fund as a means of benefiting victims of trafficking in lieu of a change in legislation.
In a letter dated today, the Minister of State, Beverley Hughes, says in relation to the RAF:
"Consideration will be given to including a specific reference to anti-trafficking initiatives", in future RAF funding rounds. But as a minimum, could not the Minister underline that assurance and ensure that the Recovered Assets Fund could be used to support anti-trafficking initiatives and specifically to fund agencies to provide secure accommodation, advice and assistance to victims of trafficking in the future?
I also raised with the Home Office how much it spends on anti-trafficking initiatives and what percentage of total Home Office expenditure that represents. The Minister was unable to give me any figures in her reply. Although she stated:
"We are currently looking at appropriate funding for all these strands", it is difficult for us in your Lordships' House to have an informed debate about what is needed when the figures are simply not forthcoming. Perhaps today the Minister can tell us what Her Majesty's Government are spending on anti-trafficking initiatives and what percentage of total Home Office expenditure that represents.
Perhaps it is too simple, but if assets are being recovered from trafficking gangs, why should not they be utilised to help the very same people who have been exploited by those gangs? The Home Office have advised me that people-trafficking victims can claim compensation from the Criminal Injuries Compensation Authority, yet so many of them have irregular immigration status, false documents, false passports and so on that that really is not possible. Irregular immigration status means that unless they immediately co-operate with the police they will be subject to deportation; hence they are not in a position to instruct a lawyer to prepare a CICA claim. That is wholly unrealistic and I am sure that the Minister knows that.
In conclusion, the organisation to which the victims will be looking for support must be adequately funded to meet an ever-increasing need. My amendment seeks to achieve that without seeking recourse to the hard-pressed funds of taxpayers. I beg to move.
My Lords, I rise to support the amendment moved by my noble friend Lord Alton and in doing so want to draw attention to the needs of those who have been trafficked. Some will be discovered in this country possibly by the police or immigration services. Others will have escaped—perhaps not a large number—and therefore may not yet have come to the attention of the special services. It is widely agreed that all those people require a period of reflection so that they can become slightly established in this country, can recover from their bad experiences and, one hopes, will be able to give evidence against those who transported, exploited and abused them.
In order for such a period of reflection to be effective, safe houses are required; places where people can live for a short period and sort themselves out. That is the kind of use which my noble friend is indicating as being highly appropriate for the money that has been or will be recovered. I hope that those comments reflect the strongest possible support for my noble friend's amendment.
I need not elaborate on the arguments which have been well articulated by the noble Lord, Lord Alton. The size of the problem is undisputed. Large numbers of people are involved and it is known to all the agencies involved. As was mentioned by the noble Lord, the amount of money involved in trafficking is extremely large. One must remember the nature of the crime. It involves, on the one hand, the taking of a large sum of money in dealing with the persons concerned—young people, particularly girls—and, on the other hand, substantial immediate and long-term damage to the persons concerned. If one provides only for a fine and possibly imprisonment of the offenders, one is dealing with only half the problem. One has not dealt with the condition of the victims and has left them without means of recourse.
It may be said, and it is true, that the Bill contains extensive powers enabling confiscation orders to be made in all kinds of criminal proceedings. No doubt when trafficking legislation is introduced those provisions can be applied. However, I venture to suggest that there are two good reasons why it is highly desirable that specific reference to trafficking is made in the Bill and that it should not be left to general references. First, under the United Nations protocol for the suppression and punishment of trafficking, we as a nation are obliged to deal with the physical, psychological and social recovery of persons involved in the trafficking. We have signed that protocol and are under an obligation to carry it into effect. It could properly be brought into effect and recognised if provision were made in the Bill to set up a fund, as the noble Lord suggests.
The other good reason for making specific reference in the Bill and not leaving the matter to general legislation is that it would enable the persons, agencies, local authorities and NGOs concerned to know of and be able to point to a specific destination for the recovery of money. That would not be the case were it covered up in general legislation.
Your Lordships know well that this is a pervasive crime committed in all kinds of areas by all kinds of people. It must be dealt with by a great variety of authorities and police forces all over the country, many of which have no idea of the nature of the crime or the remedies available to deal with it. If it were possible for them to point to a particular provision relating to confiscation money, they would undoubtedly be assisted in dealing with such cases.
Many of the authorities have no idea of what they should do. As the noble Lord mentioned, only one local authority—West Sussex—deals with such cases with any degree of comprehensiveness and scientific application. No doubt one or two others know about the matter but in general the existence of this evil is not known around the country and still less is it known what can be done. Therefore, it is highly desirable that provision should appear in legislation so that the existence of a fund can be pointed to and that money can be given. If confiscation were made, that money could be used for the necessary purpose for which it should be designed; namely, the rehabilitation of the traffickees. For those reasons and others given by the noble Lord, Lord Alton, I strongly support the amendment.
My Lords, the noble Lord, Lord Alton, spoke to the amendments with great force. His campaign on behalf of those who are trafficked for sexual or labour exploitation is well known and greatly respected. As he pointed out, he recently discussed the matter with my noble friend Lord Rooker before he left the position which I now hold.
Amendment No. 10 seeks to create a statutory fund from the confiscated assets of persons convicted of human trafficking and it requires the fund to be used for support and assistance to victims of trafficking. The noble Lords, Lord Alton and Lord Hylton, and the noble and learned Lord, Lord Wilberforce, raised much wider issues than that fund. Perhaps I may briefly touch on them.
The noble Lord, Lord Alton, referred to the incident in which 70 young people have disappeared from the care of West Sussex local authority over the course of the past 12 months. As the noble Lord knows, but other noble Lords may not know, an operation called Operation Newbridge was set up in West Sussex to address the events referred to by the noble Lord, Lord Alton. The matter concerned in particular young girls from West Africa who had arrived in the United Kingdom and claimed asylum. As unaccompanied minors, they were placed in the care of the local authority, from which significant numbers of them disappeared. It is thought that some of them may have ended up working as prostitutes in Italy.
The police investigation in Operation Newbridge highlighted the difficulty of prosecuting traffickers under the current legislation. The new offence of trafficking for prostitution will help in this regard. It will cover criminals who take people into and out of the country for the purposes of prostitution.
Since Operation Newbridge, we have seen the establishment of Project Reflex, a multi-agency task force set up to address organised immigration crime. That has led to better co-ordination arrangements with regard to police investigations into people trafficking. As I have said, the new offence of trafficking for the purposes of prostitution in the Nationality, Immigration and Asylum Bill will address the trafficking of children, as was the case in Operation Newbridge.
The noble Lord, Lord Alton, also raised the question of the extent to which what is set out in this Bill is consistent with what is to come in the new Bill. Plainly that is a matter that must be considered.
The noble Lord went on to raise wider issues. He asked what the Government are doing for victims. As set out in the White Paper, Secure Borders, Safe Haven, we are making special arrangements in partnership with the voluntary sector for the protection of the victims of trafficking for sexual and labour exploitation. These include considering giving such victims leave to remain in the United Kingdom or, where they wish to return home, helping them to do so by providing initial counselling, ensuring that they have suitable accommodation at their destination, and helping them to reintegrate into their own communities.
We are also in the process of drawing up a best practice toolkit on people trafficking that will be a guide for immigration officers, the police and others potentially dealing with trafficking. In particular, it will raise awareness of the difference between trafficking and smuggling, and help those concerned to treat trafficking victims fairly.
The noble Lord went on to mention the provision of safe houses for the victims of trafficking. As I have already indicated, our priority lies in working with the voluntary sector through the best practice toolkit and other forums to put in place the necessary arrangements to provide support services for the victims of trafficking. Those services would include consultation with the voluntary sector with regard to special arrangements for child victims. It is too early to say whether a non-governmental organisation would be the most effective mechanism for delivering these services. Currently we are discussing the provision of safe houses with a number of NGOs.
Several important wider issues have been raised in the context of this amendment, which is perfectly legitimate on the part of noble Lords. However, I turn now to the terms of the amendment. Although the noble Lord, Lord Alton, has not sought to press me very hard, I do not think that the amendment and related amendments in the group represent the best way forward. The noble Lord's proposal would present a number of problems which I shall address briefly.
First, practical difficulties would be encountered in trying to identify a particular category of confiscated proceeds for special treatment. Secondly, it would set a precedent, leading to pressure to adopt a similar approach in relation to other categories of crime. Thirdly, the proposal would detract from the non-statutory Recovered Assets Fund, which puts up to half of all seized proceeds into a pot and uses them for a range of quite broadly defined good causes. Fourthly, it would cut across the provisions already in place for the victims of trafficking and victims of crime generally.
In principle it would be open to the Government to widen the uses to which the Recovered Assets Fund is put, extending it to assist in the provision of victim support services either generally or for particular categories of victims, such as the victims of human trafficking. However, that pre-supposes that the existing and planned provision for such victims is insufficient, which the Government do not accept. Moreover, a change in the criteria for the fund would be premature at this stage, given that we set it up only late last year.
However, we shall review the scope of the Recovered Assets Fund in advance of the next financial year, 2003–04, and consider in particular whether it should be used for the benefit of victims of crime, including the victims of human trafficking.
More generally, the Government pay an annual grant, currently set at £28 million, to Victim Support to enable that organisation to provide a range of services for the victims of all types of crime. Further, it is worth pointing out that Project Reflex, which I mentioned earlier in my remarks, was provided with £22 million in the spending review of 2000. However, I am afraid that I am not able to tell the noble Lord what proportion of the Home Office budget that forms. Perhaps I may write to him with that statistic.
I hope that the noble Lord will derive some reassurance from what I have said, both with regard to the general issues and on the particular matters and thus will feel able to withdraw his amendment.
My Lords, I am grateful to the noble and learned Lord, Lord Falconer of Thoroton, for the constructive way in which he has dealt with the arguments put to the House today. This proposal forms part of a continuing attempt by many Members of your Lordships' House to raise the profile of human trafficking and to ensure that something is done about it. To that end, I am particularly grateful to my noble friends Lord Hylton and Lord Wilberforce for their contributions to the debate this afternoon.
The noble and learned Lord told the House of the plight of some of the unaccompanied minors who disappeared from social services care. They have ended up involved in prostitution in other European Union countries. That is a matter about which we certainly cannot be complacent. We shall have to redouble our efforts to provide adequate protection for those who have been entrusted into our care. Moving way beyond the general issue of economic migrants or refugees, this issue concerns unaccompanied minors. All noble Lords have a duty of responsibility towards tackling this problem on their behalf.
I am grateful to the noble and learned Lord for commenting that he will look at the compatibility of the new offence detailed in the new Nationality, Immigration and Asylum Bill with the provisions set out in this Bill, and then ensure that they are brought into some kind of accord. From his words, I suspect that he is in sympathy with the argument; that is, that this problem has to be tackled at its source. He needs to hold discussions with his colleagues in the Department for International Development on the ways in which part of our aid programme can be used to combat this problem at source.
I am also grateful for the noble and learned Lord's remarks about safe houses and consultation with non-governmental organisations. He also confirmed that it was open in principle to look again at the way in which the Recovered Assets Fund might be used on behalf of victims. I noted his comment at the end of his remarks reflecting his willingness to hold a review to look at the scope of the fund and the way in which these policies are being implemented.
In the spirit of the way in which the noble and learned Lord has dealt with the matter, I beg leave to withdraw the amendment.
moved Amendment No. 12:
Page 5, line 3, at end insert—
"(2A) Subsection (2B) applies if—
(a) the conduct concerned is general criminal conduct,
(b) a confiscation order mentioned in subsection (3) has at an earlier time been made against the defendant, and
(c) his benefit for the purposes of that order was benefit from his general criminal conduct.
(2B) His benefit found at the time the last confiscation order mentioned in subsection (2A)(c) was made against him must be taken for the purposes of this section to be his benefit from his general criminal conduct at that time."
My Lords, in moving this Amendment perhaps I may speak at the same time to Amendments Nos. 13, 14, 16, 41, 42, 44, 70 to 72, and 74. These amendments to Clauses 8 and 10 and their equivalents in Parts 3 and 4 are technical changes relating to the calculation of benefit and the use of the assumptions. Unfortunately, the problem that these amendments are designed to deal with is very real and has come to light only recently.
We are concerned here with the narrow situation where a "general criminal conduct" confiscation order is being made against a defendant who has previously been the subject of a confiscation order. The problem does not affect defendants who are before the court for a confiscation order for the first time.
Provision is needed to deal with the narrow situation I have referred to because, as noble Lords will be aware, "general criminal conduct" means all of the defendant's criminal conduct at any time in the past. If the court were to make a "general criminal conduct" confiscation order now and a similar one was made against the same person five years ago, there would be a risk of double counting of all the benefit gained by the defendant more than five years ago, unless the Bill prevented it.
At present, Clause 8 prevents this double counting by providing that, if the court is making a general criminal conduct confiscation order, it must deduct any amount ordered to be paid under a previous confiscation order. So if the defendant's benefit from general criminal conduct is calculated now at £120,000 and a previous order was made for £60,000, the defendant can be ordered to pay only £60,000 this time. That is obviously correct.
Unfortunately, there is a technical problem connected with the operation of the assumptions, which means that the provision will not work as we would wish it in all cases. The problem is that Clause 8 as it stands requires the court to calculate the defendant's benefit from general criminal conduct afresh every time it makes a confiscation order. This means in practice in some cases where benefit has been exposed by the operation of the assumptions at the time of a previous confiscation order that the director and the prosecutor would have to prove that benefit to the court without the assistance of the assumptions. They might well find it impossible to do so.
If the authorities were unable to prove this earlier benefit, the clause as it stands would require the defendant to pay nothing. For example, if the operation of the assumptions exposed £60,000 worth of benefit in 1990 and the operation of the assumptions against different property today also exposes £60,000 worth of benefit, the clause would require the previous £60,000 to be deducted from the current £60,000, leaving the defendant to pay nothing. That is not the desired result. The mechanism should yield a total benefit of £120,000 this time round, from which the earlier £60,000 is deducted.
The amendments achieve this. They will require the court to accept the assessment of benefit made by the court that previously made a confiscation order against the defendant. This will relieve it of the unnecessary burden of revisiting the earlier benefit when it makes another confiscation order against the same person.
The amendment to Clause 10 and its equivalents deals with the fact that a previous confiscation order may have been made in the past six years. The amendments to Clause 8 require the present court to accept the benefit found by the previous court. Without this amendment the present court could make the assumptions against the same property and so double count the same benefit. In practice, the "serious risk of injustice" exemption would probably come into play here, but we prefer to put the matter beyond doubt.
Regrettably, these amendments are of more practical importance than may be immediately obvious. It is far from unknown for more than one confiscation order to be made against the same defendant. I beg to move.
moved Amendment No. 14:
Page 5, line 21, at end insert—
"(5) The reference to general criminal conduct in the case of a confiscation order made under any of the provisions listed in subsection (4) is a reference to conduct in respect of which a court is required or entitled to make one or more assumptions for the purpose of assessing a person's benefit from the conduct."
On Question, amendment agreed to.
moved Amendment No. 15:
After Clause 9, insert the following new clause—
"COMPENSATION OF CREDITORS
(1) Any person who was a creditor of the defendant at the time when the confiscation order was made may, within one year of the date of the order, make an application to the court for compensation.
(2) The court may require the enforcement authority to pay compensation to the applicant if it is satisfied that—
(a) as a result of the making of the order the defendant is wholly or in part unable to repay the debt;
(b) the debt was incurred for full consideration; and
(c) at the time the debt was incurred the applicant had no reason to believe that a confiscation order could be made against the defendant."
My Lords, this is the first of a number of groups of amendments which deal with what we see as a serious problem in this Bill, which is the total disregard by the Government of the adverse effect that it may have on bona fide creditors of persons against whom orders under the Bill are made and other innocent third parties.
In moving this amendment, I shall speak also to Amendments Nos. 24, 43, 54, 73, 79 and 136. This group of amendments aims to protect the position of creditors when a confiscation order, a restraint order or a civil recovery order has been made against their debtor. A defendant against whom the order under the Bill has been made may, for example, have commissioned building works from a local, small builder, thousands of pounds may be due under that commission and the builder may know nothing about the defendant's criminal history. But as the result of the making of one of the orders under the Bill the creditor may well not get his money and may therefore end up with his business going bust.
There are in fact two sub-groups of amendments in the group. Amendments Nos. 15, 43, 73 and 136 are new clauses which provide for compensation to be payable where a confiscation order or a civil recovery order has been made and where the circumstances specified in the clauses are satisfied. The noble Baroness, Lady Buscombe, and the noble Lord, Lord Kingsland, have put their names to all of those amendments. Amendments Nos. 24, 54 and 79 allow debts to a bona fide creditor to be paid out of the property which is subject to a restraint order. I accept that a confiscation order or a civil recovery order will not necessarily leave the defendant penniless, but in a number of cases they may very well do so.
I accept that the Government have legitimate concerns about the creation of bogus debts by which funds can be extracted from the estate of the defendant subject to the order. Our amendments are designed to cover both those points because before any compensation can be paid by the director out of the funds of the agency three things will have to be established. First, it will have to be shown that as a result of the order the defendant is in fact unable to pay his debts. Clearly, if the defendant is able to do so, he should be the primary source from which payment should be sought. Secondly, the debt must be one that has been incurred for full consideration. Obviously, we do not wish to enable bogus debts and artificially created debts to be used, as I have said, to extract money. So the existence of full consideration provided by the creditor must be shown. Thirdly, the creditor must have no reason to believe that a confiscation order or a civil recovery order is likely to be made so that if the creditor is aware of the possibility of an order then he is on notice of the existence of the risk. We accept that in those circumstances it is proper that he should bear that risk.
When these amendments were discussed at Committee stage the Government strongly overstated their case against them. The noble Lord, Lord Rooker, said in the debate on 22nd April:
"In practical terms their effect would be disastrous on the operation of the legislation".—[Official Report, 22/4/02; col. 62.]
That is an absurd overstatement. I can understand the Government's concerns. We have tried to meet them and I believe that our amendments succeed in doing so.
In addition to that, what I cannot understand is the Government's attitude that somehow they have a moral claim to the proceeds of a confiscation order or a civil recovery order, which has priority to the claims of creditors. That is not so. In most cases confiscated property never belonged to the Government. In those cases where it did, such as criminal tax evasion, they have perfectly effective existing rights to get that property back. The purpose of the confiscation order is not to compensate the Government for any loss, but to impose a punishment on the defendant and a deterrent against the defendant and other possible people who make a profit from crime. In so far as a confiscation order or a civil recovery order leaves a defendant unable to pay a debt due to an innocent creditor, it is the creditor who suffers that punishment and not the defendant. The Government say that the creditor already runs the risk of the defendant's bankruptcy or default even if there is no confiscation order. That is perfectly true, but in no way does that justify adding another risk.
As I said in Committee, if I were an innocent creditor and found that the debtor could not pay because the Government had seized assets under a confiscation order, I would believe that, frankly, the Government had stolen my money and I would be right to believe that. The fact that a confiscation order overrides unsecured debts, even if the creditor can prove to the hilt that the debt was incurred for full value and in good faith, is completely unacceptable. I beg to move.
My Lords, I, too, wish to speak to the amendments proposed by the noble Lords, Lord Goodhart and Lord Thomas of Gresford. My noble friend Lord Kingsland and I have added our names to Amendments Nos. 15, 43, 73 and 136.
As the noble Lord, Lord Goodhart, said, these amendments would allow an innocent creditor to make a claim for compensation if it is made within one year of the confiscation order. These are sensible and reasonable proposals. The creditor must be innocent of the activities of the defendant and the amendments assist only those creditors where the debt is for full value and cannot be paid in the normal way by the defendant because of the confiscation order. This right will occur only if the confiscation order has mopped up all of the assets. If there are any assets left, it is only right and proper that the debt should be paid in full.
I support the noble Lords, Lord Goodhart and Lord Thomas of Gresford, in Amendments Nos. 24, 54 and 79, which concern restraint orders. Surely there ought to be an exclusion for the purpose of meeting legitimate debts. Indeed, these amendments foreshadow amendments that we have proposed in relation to insolvency in Part 12 of the Bill. We question whether it is right that innocent creditors should lose out to the Consolidated Fund.
It is important that we briefly revisit, as the noble Lord, Lord Goodhart has done, the debate in Committee, where the noble Lord, Lord Rooker, stated that if similar amendments were accepted,
"We would be setting up a system that invites claims from bogus creditors who in reality were associates of the defendant. A whole new industry would start up. It would be difficult to prevent and would greatly weaken the confiscation system. What is worse, it would make the legislation inoperable from the enforcement authorities' point of view. The enforcement authorities would undoubtedly be discouraged from pursuing confiscations with the threat of claims from unsecured creditors hanging over them".—[Official Report, 22/4/02; col. 63.]
This goes to the heart of a weak argument. The courts are perfectly capable and perfectly astute in dealing with false claims. They are able to decide which is a false claim and which is not. We should be grateful if the Minister could provide us with examples of where a creditor has made a false claim that has been accepted by the courts. It is simply not good enough for the Minister's predecessor, the noble Lord, Lord Rooker, to dismiss the risk of business bankruptcy to many innocent, legitimate creditors as "the way of the world".
I agree with the noble Lord, Lord Goodhart, that such arguments strongly overstate the position and accentuate the weakness of the Government's case.
My Lords, these amendments are very similar to those which have been discussed in detail both in another place and in Committee in this House.
The effect of the new clauses proposed in Amendments Nos. 15, 43 and 73 would be to make the enforcement authorities pay the unsecured debts of any person whom the defendant was unable to repay because of the making of a confiscation order under Parts 2, 3 and 4 of the Bill where the unsecured creditor was unaware of the criminal activity of the defendant. So the recovery authority would be recovering not only the assets from the proceeds of crime, but would also become the agent which pays off all the unsecured debts of the criminal. It would become a kind of managing agent for the unsecured debts of the criminal.
Amendment No. 136 would have a similar effect in relation to Part 5 of the Bill as Amendments Nos. 15, 43 and 73 would have in relation to Parts 2, 3 and 4. Under Amendment No. 136, the court would be able to require the enforcement authority to pay compensation to any person the respondent was unable to repay because of the making of a recovery order. The requirement could be placed on the enforcement authority if the debt was incurred for full consideration and the debtor had no reason to expect that a recovery order could be made against the respondent. So a fairly stunning protection would be given to unsecured creditors by these provisions. The effect of Amendments Nos. 24, 54 and 79 would be to allow restrained assets to be used to pay the defendant's debts.
I shall speak first to the amendments as they would affect the criminal confiscation measures in Parts 2 to 4 of the Bill as the legal landscape in those parts differs considerably from that in Part 5. All of the amendments which affect Parts 2 to 4 of the Bill bear upon the position of unsecured creditors under the confiscation legislation in circumstances where the position is unaffected by bankruptcy proceedings. As your Lordships will be aware, the Bill protects the rights of secured creditors. The only issue raised here concerns the position of unsecured creditors.
I believe that it was the noble Baroness, Lady Buscombe, who raised the question of the builder who goes bankrupt because he is not paid as a result of unsecured debt. If the position of suppliers is such that their solvency depends upon the debt—we are not talking about suppliers of food or drink and so on but about builders—they can protect themselves by seeking security in relation to such a debt, which may well be sensible if the level of commitment was such that their solvency depended upon it.
As the noble Lord, Lord Goodhart, made clear, the making of a confiscation order does not relieve the defendant of the obligation to pay his debts. They remain payable whether or not a confiscation order is made. Even if the defendant uses the property currently available to him to pay the confiscation order, he remains liable to pay the debt later. It is not the responsibility of the state to pay criminals' debts for them.
Secondly, lenders who are not prepared to take the risk of losing their money can secure their loans. Thirdly, society's claim to the proceeds of crime is better than that of an unsecured creditor. Creditors have no right to be paid out of the proceeds of crime. If a criminal perpetrates a number of crimes against unknown victims from which he benefits substantially, and ultimately such property is sold to meet a confiscation order, those funds belong to society and the defendant's creditors should not be regarded as having a prior claim to them.
Fourthly, we believe that these amendments as a whole would undermine a number of other obligations to the Crown. What is the difference between the obligation to pay a confiscation order and the obligation to pay one's taxes? Are taxpayers to be relieved of their obligation to pay because they happen to owe an individual a private debt? I repeat here the question posed by my noble friend Lord Rooker in Committee: are the courts to be able to set aside fines, compensation orders, costs and other disposals merely because their subject happens to have outstanding debts? In our view, they should not.
Turning to the practical implications that were touched upon by the noble Baroness, Lady Buscombe, and the noble Lord, Lord Goodhart, the amendments would invite claims from bogus creditors who were in reality associates of the defendant. This would be very difficult to prevent and greatly weaken the confiscation system. Of course the courts could look into such matters, but we must remember that these are transactions where all of the facts are in the hands—
My Lords, I wonder why it is assumed that bogus creditors would not be equally able to put in claims if the person went bankrupt. In those circumstances there would be an examination of the claims of the so-called bogus creditors, just as there would be here.
My Lords, then that really detracts from the main argument; namely, how difficult is it in those circumstances to come to a particular conclusion? Let us recognise the difficulty of what such cases involve. If we assume the transaction to be bogus, they involve facts entirely in the knowledge of the two parties who are putting forward the claim to the court. Of course, the courts are extremely experienced in these matters, but they are dealing in an area where frequently no alternative view is being put.
The amendments would also encourage defendants to defeat the confiscation process by running up legitimate debts, safe in the knowledge that the authorities would be left out of pocket at the end of any confiscation proceeding. So the question posed by the amendments is: is there a sufficient risk of a real problem here to make this exception a sensible one? We firmly believe that there is not, that it would give rise to bogus claims and that it puts the balance in the wrong place.
The three new clauses proposed in Amendments Nos. 15, 43 and 73 would in our view make the legislation inoperable in practical terms. It was said by the noble Lord, Lord Goodhart, that that was over-stating the case. They would invite claims against the enforcement authorities, as he rightly acknowledged, and it is quite possible that those authorities would be out of pocket at the end of the procedure. It is difficult to imagine a better way of deterring them from taking on confiscation cases.
Moreover, as I pointed out earlier, it is not the moral responsibility of the state to take over the defendant's debts. That, however, would be precisely the effect of this group of amendments.
Continuing with the criminal confiscation amendments, the new subsections proposed in Amendments 24, 54 and 79 would enable the court to vary restraint orders to allow the defendant's unsecured debts to be paid. These amendments would reverse the effect which the confiscation legislation, including this Bill, has always had; namely, that debts should not be paid out of realisable property under restraint.
Here, too, I appreciate that noble Lords have attempted to have regard to the practical effect of the amendments, and have limited the power to debts incurred before the restraint order was obtained. Nevertheless, the amendments would undoubtedly have an adverse practical effect by encouraging the submission of claims that debts were, in fact, incurred before that time when in reality they were not, and by encouraging the submission of spurious claims in general.
Equally, we are unable to accept the principle underlying the amendments that unsecured creditors have a better claim to the proceeds of crime than victims of crime or society. Proceeds should not be allowed to remain in circulation to pay creditors.
I turn now to Part 5 dealing with civil recovery. An identical amendment was discussed in Committee. We explained then that the Government do not support the principle behind the amendment. They take the view that its effect would be highly prejudicial to civil recovery proceedings. I can add little to what was said then.
In the case of secured creditors, we do not—as with Part 2—see any difficulty. A building society, for example, would be an associated property holder in respect of a house on which the society had granted a mortgage. Its interest would therefore be protected in the same way as any other associated property. The Bill also recognises the prior claims of preferential debts, as defined in the insolvency legislation, by giving them priority over civil recovery proceedings.
The issue is therefore simply whether unsecured creditors should be granted protection in cases where a person, some of whose property has been made subject to a recovery order, is subsequently unable to satisfy some or all of the debts owed.
The director of the assets recovery agency is seeking to recover the proceeds of unlawful conduct in order to prevent and disrupt organised crime. The director will act on behalf of the state in cases where there may often be no identifiable victim. Our case is that the person in possession of the proceeds of unlawful conduct should not be able to retain such wealth, on the basis that it never properly belonged to him. If it did not properly belong to him, he had no entitlement to promise it to other people.
An unsecured lender will inevitably expose himself or herself to a wide range of risks. The fact that the borrower may subsequently be subject to a recovery order is but one of them. The borrower or recipient of goods or services may turn out to be insolvent, may die without leaving an adequate estate or may simply default.
As I have said previously, the amendment overlooks the fact that the making of a recovery order does not absolve any respondent of the obligation to pay his debts or of any other private or personal obligations. Debts remain payable in the first place out of other property owned or income earned by the respondent.
We have no reason to expect insolvency to be a routine aftermath of the civil recovery proceedings. But if a respondent later finds himself insolvent, then the normal rules for dealing with that situation, including the prioritisation of creditors, will apply. We do not accept that it would be right to characterise such a situation as being the product of the enforcement authority's success, and consequently the enforcement authority's financial responsibility. It is a product of the respondent's unacceptable reliance on recoverable property.
As we have discussed previously, the amendment would have an adverse practical effect on the operation of an effective civil recovery system, as it would invite claims from bogus creditors who were in reality associates of the respondent. The same points that I made in relation to the confiscation scheme apply as well.
In relation to civil recovery, the amendment would make the legislation inoperable from the enforcement authorities' point of view. The enforcement authorities would undoubtedly be discouraged from pursuing potential cases if the threat of claims from unsecured creditors, of whom it may be possible to know nothing beforehand, were hanging over them. Indeed, it would apparently be possible for debts incurred after a recovery order was made to come within the terms of the amendment. The amendments are in effect saying that the recovery authority has to pay all of the unsecured debts where there is a bankruptcy after the making of the civil recovery order. That is a huge undermining of the Bill.
I understand, of course, that there is concern that civil recovery of the proceeds of unlawful conduct by the state is thereby given priority over ordinary creditors. That would certainly be the case if the situation arose. However, this would not be the only situation in which creditors could find themselves disadvantaged by the state. The same would apply if a person were unable to pay debts because of tax or national insurance commitments. Where, however, they cannot pay their unsecured debts because their assets have been taken under a civil recovery order because they are the proceeds of crime, the amenders would like the position to be that the recovery authority has to pay their debts on their behalf. We simply do not accept that the state should indemnify creditors in the particular circumstances envisaged by the amendment.
For the reasons I have given on this occasion and those recited far more eloquently by my predecessors, we believe that these amendments are unacceptable. They would have a very significant effect on our attempts to get the assets of organised crime, and on the existing law. It is a matter for noble Lords opposite whether they wish to undermine both the existing protections and those that we seek to put in place in the Bill. In the light of my remarks, I invite the noble Lord, Lord Goodhart, to withdraw his amendment.
My Lords, the noble and learned Lord, Lord Falconer of Thoroton, is a most distinguished and successful barrister. But even the most distinguished and successful of barristers sometimes has to appear to advance a totally indefensible argument. I must say that I have rarely, if ever, heard such an indefensible argument as that put forward by the noble and learned Lord this afternoon.
For a start, he said that the enforcement authority would be an agent paying off the unsecured debts of the criminal. In a sense, that is true. But he then said that what we are asking for would be "stunning" protection. What is stunning about this is the Government's claim to take away an innocent person's property. That is, among other things, contrary to the first protocol of the European Convention on Human Rights.
In the case of the builder that we have suggested, the Government are claiming money twice because the state gets the improved value of the defendant's building without having to pay for the cost of the improvement. That is clearly double counting.
As the Minister says, the Bill protects the rights of secured creditors. That means banks and building societies. They are the big boys, who always come out well on this sort of occasion. However, the small people—the unsecured creditors—lose out. The Minister said that an unsecured creditor could get protection by obtaining security. Let us live in the real world. Whoever heard of a builder who got security against the person who commissioned him to do the building? That is wholly unrealistic.
The Minister said that it is not the responsibility of the state to pay the criminals' debts for them. It is not the right of the state to deprive a creditor of his property interest, which is the benefit of his debt. If the state seizes the only money that can be used to pay the debt, surely the state ought to pay it.
The noble and learned Lord compared the situation with the obligation to pay taxes. That is a legitimate debt due to the Government and on an entirely different basis from seizure under a confiscation order.
Is there risk of a real problem? The Government say that the amendment would give rise to bogus claims. I do not believe that it would give rise to a large number of bogus claims and when brought they would be spotted. Surely the right course is not to bar the rights of bona fide claimants unless there is clear evidence that those rights are being abused to such an extent as to justify extreme measures of the kind proposed here. No such evidence exists. The Government have put nothing before us.
The noble and learned Lord said that if the property did not properly belong to the defendant, he should not be able to use it. Surely the legal situation is that he can use it unless someone has a better right to it. As I said in a previous debate, the confiscation order is not a claim of property to which the Government are entitled. It is, in a sense legitimately, a punishment and deterrent. There is no punishment or deterrent if the sufferer is the creditor.
I do not believe that the enforcement authorities would be deterred for a moment from taking enforcement proceedings by the existence of these possible claims. The Government's attempt to override the legitimate interests of bona fide creditors is unnecessary, unfair and wholly misguided. In the circumstances, I have no alternative but to ask for the opinion of the House.
moved Amendment No. 16:
Page 6, line 25, at end insert—
"(8A) But if a confiscation order mentioned in section 8(2A)(c) has been made against the defendant at any time during the period mentioned in subsection (8)—
(a) the relevant day is the day when the defendant's benefit was calculated for the purposes of the last such confiscation order;
(b) the second assumption does not apply to any property which was held by him on or before the relevant day."
On Question, amendment agreed to.
Clause 14 [Postponement]:
moved Amendment No. 17:
Page 9, line 2, at end insert—
"(11) A confiscation order must not be quashed only on the ground that there was a defect or omission in the procedure connected with the application for or the granting of a postponement.
(12) But subsection (11) does not apply if before it made the confiscation order the court—
(a) imposed a fine on the defendant;
(b) made an order falling within section 13(3);
(c) made an order under section 130 of the Sentencing Act (compensation orders)."
My Lords, in moving Amendment No. 17, I shall also speak to Amendments Nos. 50 and 75.
The purpose of these amendments is straightforward. They are designed to stop confiscation orders from being quashed merely because some procedural error has taken place in the application of the postponement procedures. I shall, if I may, provide your Lordships with a little background on this occasion, as it is directly relevant to the amendments.
As your Lordships will be aware, the Bill amends the postponement regime in the existing legislation. In particular, following recommendations in a report of the Performance and Innovation Unit, the normal postponement period is extended from six months to two years. It is important to understand, however, that the basic mechanics of the postponement regime envisaged by the Bill remain rather similar to those in the existing legislation.
Unfortunately, it is becoming increasingly clear that the courts are finding this legislation difficult to operate. A string of appeal cases testifies to the fact that defendants regularly attempt to have the confiscation order overturned on the grounds that the postponement procedures were not applied properly by the court. Confiscation orders are being lost as a result. The case of Woodhead, decided by the Court of Appeal in January this year, is a good example. In that case, the postponement procedures had been followed to the letter. However, the Court of Appeal overturned a confiscation order of £200,000 on the grounds that the judge had not shown that he was exercising his discretion when agreeing to the postponement.
The Government's concern is clearly that the postponement arrangements in the Bill should not come under similar attack. The purpose of the amendments is to prevent that from happening. Most of the current difficulties arise from the fact that the legislation is interpreted as imposing a strict procedural regime which must be followed to the letter if a confiscation order is not to fall. We do not think that this approach is correct. We are not dealing here with a trial but with the imposition of a post-conviction measure. It is quite inappropriate to quash a confiscation order merely because there has been some procedural defect in the application of the post-trial postponement procedures. The amendments therefore make it clear that a confiscation order made under the Bill cannot be quashed just because there has been some technical defect in the court's application of the postponement procedures.
I should stress, however, that the amendments do not allow the courts to ignore other aspects of the confiscation procedures. Subsection (12) states explicitly that the procedural protection afforded in relation to postponement does not apply where they make the mistake of imposing a fine or some other financial order before they make the confiscation order. This is because the defendant would suffer serious hardship if one of these orders were made before the confiscation order. There is no discretion to reduce the confiscation order to take account of these orders. The confiscation order needs to be made first so that fines and other financial orders can be made with the knowledge of how much is required to be paid under the confiscation order.
These amendments will improve the practical operation of the Bill and preserve the integrity of a confiscation order. I beg to move.
My Lords, this is a short point. The Bill gives power to postpone proceedings for a confiscation order for up to two years, and indeed in exceptional cases for longer. The Government also allow the court to defer sentence until the end of the period of postponement. I believe that defendants remanded in custody are entitled to know what sentence they are going to get within a reasonable time of the conviction. It would certainly be wholly wrong to delay the sentence for two years or more.
We therefore believe that the Bill should contain a cut-off point for sentencing in cases where the defendant is imprisoned. What we have suggested in this amendment is a period of two months with power to delay further in exceptional cases. If the Government were prepared to accept a cut-off after a period of more than two months, I think that we would be content with that if it was a reasonable period. But it is plain, frankly, that we should not leave the defendant hanging around awaiting sentence for two years. That would, in the American phrase, be a cruel and unusual form of punishment.
If the defendant is being unco-operative about disclosing his or her assets, which may be part of the reasoning for postponing sentence, I should expect that the defendant would be punished by imposing a longer sentence. That is the way to deal with the matter. I believe that a delay of two years in sentencing is not justified. I beg to move.
My Lords, an earlier prototype of these amendments was discussed in Committee. I refer noble Lords to columns 55 and 56 of Hansard of 22nd April.
I add to what was said on that occasion as follows. In its original form the confiscation legislation did suffer from the sort of problem that the amendment seeks to deal with. The legislation always required the court to make the confiscation order before sentencing the defendant. Confiscation matters are often complex so defendants often had to wait for a long period before learning their sentence. That is a situation that I think we all agree must not be allowed to happen unnecessarily, as the noble Lord, Lord Goodhart, said.
The postponement powers were introduced largely to deal with precisely this problem. They give the court a wide discretion to sentence the defendant as soon as it has postponed the confiscation proceedings; and no doubt that often happens in practice.
As my noble friend Lord Rooker pointed out, we see no reason to impose fixed time limits on the court, given that it already has power to sentence the defendant quickly. It is also a matter of a little concern to us that the amendments import the question of exceptional circumstances and the issue of whether the defendant has been remanded in custody. We see no need for those complications. If the court postpones the confiscation proceedings, the powers to sentence quickly are there; and no one has complained that the courts are unable or unwilling to exercise them.
In short, we think that the provision is best left as it currently stands. We believe that the court has the necessary powers and is the best arbiter of how to exercise them in this context.
I hope that in the light of what I have said—I broadly seek to deal with the same problem as the noble Lord, Lord Goodhart—the noble Lord will be reassured and will feel able to withdraw his amendment.
moved Amendment No. 19:
Page 11, line 28, at end insert—
"(8) No information given under this section which amounts to an admission by the defendant that he has benefited from criminal conduct is admissible in evidence in proceedings for an offence."
Briefly, a defendant who responds to an order under this clause may make an admission that he has benefited from criminal conduct. The noble Lord suggested that the Bill should protect the defendant from self-incrimination in relation to these orders. The effect of the amendments is very much along the lines suggested by the noble Lord. Their effect will be to prevent the authorities from using the defendant's admission to prosecute him or another person. In this way, we hope to encourage defendants to be more forthcoming about their benefit from criminal conduct.
However, I should make it clear that where the information provided exposes the commission of an offence, the protection we are creating here would not prevent the authorities from prosecuting the offence on the basis of some other evidence. It would be wrong to create a blanket immunity against prosecution. Accordingly, the amendment prevents admissions made under this clause from being used to prosecute the defendant or another person, but it does not prevent a prosecution from proceeding on the basis of other evidence.
There is one further point I should mention. During Committee proceedings the noble Lord, Lord Thomas of Gresford, asked whether failure to comply with a court order under Clause 18 would attract contempt proceedings. My noble friend Lord Rooker did not have an immediate answer and indicated that he would look further into the matter.
I have since written to the noble Lord but the position is the following. We want defendants to co-operate fully and frankly with the court. Where a defendant declines to respond to an order concerning the extent of his benefit, it will be open to the court by virtue of Clause 18(4) to draw inferences from his non-co-operation. We have to accept, however, that the fact that a court may draw inferences from a defendant's non-co-operation is unlikely to be of much help if a defendant refuses to provide information about the extent and whereabouts of his property.
Neither the CPS nor Customs is aware that contempt proceedings have ever been brought against a defendant who has declined to provide such information. Furthermore, we think that Clause 18, as it presently stands, is ambiguous as to whether contempt could be applied or not for non-compliance with the court's order to make information available. We therefore intend to bring forward an amendment at Third Reading to put the matter beyond any doubt. We have it in mind to qualify Clause 18(4) by stating that the power to draw inferences does not affect any other power of the court to give effect to its orders, so contempt proceedings would be available. I beg to move.
My Lords, in moving Amendment No. 20, I wish to speak also to Amendments Nos. 53 and 78. This is another short point. English law and, as far as I know, Scots law have never accepted the principle of trial in absentia. Therefore, a defendant cannot be convicted unless he or she has been present at least at the start of the trial. Unless they have been convicted, they cannot, of course, be punished. But the clauses which we seek to leave out override that principle by allowing a confiscation order to be made where the defendant has absconded.
A confiscation order is a punishment. Under this clause it would be punishment where there has been no conviction. In effect, we would see a sentence where there had been no trial. That, I believe, is wrong; it is also unnecessary. The enforcement agency is likely to have obtained a restraint order. Indeed, if it has not obtained a restraint order, it has nothing left to confiscate. If the defendant absconds, the restraint order will, of course, stay in place. The agency can leave it until the defendant is apprehended and tried, or it can apply instead for a confiscation order or a civil recovery order. We believe that the clauses we seek to delete override a longstanding and entirely proper principle of the criminal law and do so without any pragmatic justification. I beg to move.
My Lords, the effect of these amendments would be to make it impossible for the court to make a confiscation order against a person who is charged with a criminal offence and flees justice before being convicted.
Similar amendments were tabled by the noble Lord in Committee. The debate is recorded in Hansard of 22nd April at columns 97 to 100. The matter was discussed extensively on that occasion and I do not intend to repeat all the arguments. There is perhaps one comment that I should make initially in elaboration of a point that was emphasised more than once. The provision in the Bill is not new. In Northern Ireland, it has already extended beyond drug trafficking to cover other criminal offences for some years by virtue of the Proceeds of Crime (Northern Ireland) Order 1996. So while it is true that the current provision is being extended in England and Wales and Scotland, the nature of that extension is not as revolutionary as might at first appear.
Our main reason for opposing these amendments was also touched upon by the noble Lord, Lord Rooker, and again his comments would benefit from a little further elaboration. While we accept that the possibility that applying for a civil recovery order might provide a solution in some cases, it would not always do so. As my noble friend pointed out, criminal confiscation and civil recovery are very different tools. In particular, to obtain a civil recovery order, the director has to prove the criminal origin of the recoverable property.
However, if the only property at issue has been legally obtained, there would be no possibility of obtaining a civil recovery order. For example, if a criminal inherits an amount of money, that money could be confiscated to enforce a criminal confiscation order that was made in absentia under the Bill but it would most certainly not be subject to civil recovery under Part 5.
So long as a theoretical gap in our armoury would be created by the removal of the powers, we wish them to remain in the Bill. It would be embarrassing and wrong if just one substantial confiscation order was lost as a result of their removal. As my noble friend Lord Rooker emphasised, there are adequate safeguards to ensure that they are not used inappropriately or oppressively. In those circumstances, I invite the noble Lord to withdraw his amendment.
My Lords, I am less than fully satisfied by the answer of the noble and learned Lord. The issues that are raised in this regard go somewhat deeper than he suggested. In principle, I would have wished to press this point. However, I recognise that one has to be somewhat selective about the issues that one chooses to fight to a finish in your Lordships' House. This issue, I am afraid, is not one of them. I beg leave to withdraw the amendment.
My Lords, in moving this amendment, I shall speak also to Amendments Nos. 22 and 23.
This matter was dealt with in Committee on 22nd April 2002 at cols. 101 to 103 of Hansard. I can deal with the matter fairly concisely by a process of selective quotation, which will of course be totally fair and balanced.
The two key parts of the Bill are Clause 32(2) and Clause 33(4). Clause 32(2) states:
"On an appeal under section 31(2) the Court of Appeal may confirm the decision, or if it believes the decision was wrong it may ... itself proceed under section 6 . . . or . . . direct the Crown Court to proceed afresh under section 6".
That is at the Court of Appeal stage. The stage involving the Judicial Committee of your Lordships' House is dealt with in Clause 33(4). It states:
"On an appeal from a decision of the Court of Appeal to confirm the decision of the Crown Court not to make a confiscation order or from a decision of the Court of Appeal to quash a confiscation order the House of Lords may ... confirm the decision, or ... direct the Crown Court to proceed afresh under section 6 if it believes the decision was wrong".
Subsection (5) states:
"In proceeding afresh in pursuance of this section the Crown Court must comply with any directions the House of Lords may make".
My observation on those two clauses at the Committee stage was that the individual who is the subject of the confiscation order has to go through no less than three stages as first instance hearings with, so far as I can see, the prospect of having to face, at each level, fresh injections of evidence by the prosecution or the director.
In dealing with my submissions, the noble Lord, Lord Rooker, said, inter alia:
"The appeal is, of course, concerned . . . not with the verdict of the jury or any matter underlying the conviction which preceded the confiscation hearing".
I entirely accept that. He then went on to discuss the purpose of the measures. He said:
"The purpose of this appeal is to deal with errors or law; for example, the sort of case where the court refuses to comply with a clear statutory requirement, not least the requirement to go through the confiscation procedures. Such instances are, regrettably, not unknown".
I should be most interested, incidentally, to hear whether the noble and learned Lord the Minister can cite any such instances. However, that is not germane to the point that I want to make which is that this issue is purely a matter of judicial review. The only expressed concern about the legal aspects of proceedings in the Crown Court or Court of Appeal is whether there has been an error of law. Surely that can be dealt with by constraining the appeal procedure to precisely that consideration.
The only other purpose identified by the noble Lord, Lord Rooker, that the appeal clauses should perform features in the next paragraph of his speech. He said:
"The appeal also covers factual mistakes such as adding up the benefit incorrectly or failing to take an item of property into account as realisable property which should be taken into account. The right of appeal is unlikely to be used frequently but we expect it to function as a valuable quality control mechanism in confiscation proceedings".—[Official Report, 22/4/02; col. 102.]
Once again, that is an extremely limited purpose, if that is, indeed, the purpose of the clauses.
If we are talking only about, first, judicial review and, secondly, factual error, surely that could be dealt with by a much more constrained text than the very broad text with which we are presented in the draft. I beg to move.
My Lords, I want to raise a point on Clause 33, which does not arise directly in relation to the amendment moved by the noble Lord. It is a question that has just occurred to me. Clause 33(1) appears to give an appeal as of right,
I do not know whether that is the intention; if so, it would be the only such appeal of which I know. Surely the clause should say, "An appeal lies to the House of Lords with leave of the Court of Appeal or with leave of the House of Lords". Perhaps the Minister will consider that and deal with it if necessary.
My Lords, somehow, I was warned that this question was coming and I have been briefed on it. I shall deal with that point first. So uncertain of me are my officials that they have handed me a second copy of the note that sets out the position on this matter.
Clauses 89 and 90 deal respectively with the,
"An appeal to the Court of Appeal . . . lies only with the leave of that Court".
The noble and learned Lord, Lord Lloyd of Berwick, asked: why is there no similar provision? He referred back to Clauses 32 or 33 but the point arises precisely in respect of Clause 90; that is, why does not Clause 90 state that an appeal lies only with your Lordships' House with its leave? The answer is that leave to appeal to your Lordships' House may be granted either by this House or by the Court of Appeal. The procedure is accordingly more complex than that involved in appealing to the Court of Appeal. Clauses 89 and 90 contain an order-making power that specifically covers procedural issues. I make it clear that the order under Clause 90 will cover leave to appeal to the Judicial Committee of this House and therefore that the absence of a reference to the subject in Clause 90 is no cause for concern. In other words, we will use the order-making power to make sure that leave is required before an appeal is made to the Judicial Committee of this House. I am sorry that I took so long to get to that point.
I return to the points raised by the noble Lord, Lord Kingsland. He rightly accepts that we are not overturning juries' verdicts in this regard. As he said, the right of appeal is directed solely against errors of law and those made by judges. It is designed to redress the regrettable but inevitable fact that in any system of law, the courts have occasionally shown themselves capable of making irrational and perverse decisions in confiscation hearings. There is currently no remedy against such errors but there should be. It is precisely because such aberrations are rare that we do not expect the new right of appeal to be used frequently. Nevertheless, it will be an important quality control mechanism in confiscation proceedings, and it has been welcomed widely.
The noble Lord raised the concern that one person could be the subject of confiscation proceedings three times. He said that such proceedings would take place: first, in the Crown Court; secondly, in the Court of Appeal—with the court either hearing the case itself or directing it back to the Crown Court; and, thirdly, the House of Lords, which, because it cannot deal with the matter itself, would direct it back to the Crown Court. The error in that proposition is that the Court of Appeal and the House of Lords will not direct two hearings. In practice, if the Court of Appeal made an order and there was then an appeal to the House of Lords, between them, the Court of Appeal and the House of Lords could only ever order one rehearing.
However, it is unlikely that, in practice, there would ever be more than one confiscation hearing. I say that because the Court of Appeal will have the power only to hold a rehearing or direct the Crown Court to proceed afresh where the Crown Court has not made a confiscation order. In practice, the only circumstance in which the Crown Court is likely not to have made a confiscation order is where it has refused to hold a confiscation hearing in the first place.
The noble Lord, Lord Kingsland, also suggested that there was no precedent for the powers either in United Kingdom law or in the laws of continental Europe. I am not sure whether he intends to proceed with that point. If he does, a 1993 report by the Royal Commission on Criminal Justice entitled, Criminal Justice Systems in Other Countries, states that there are prosecutors' rights of appeal in the Netherlands and Italy. We are also aware of prosecutors' rights of appeal on a point of law against an acquittal in some other common law jurisdictions.
I believe that that deals with all the points raised by the noble Lord, Lord Kingsland. In the light of what I have said, I very much hope that, first, he will see the importance of the provision; secondly, he will see that he is wrong in relation to the issue of the three hearings; and, thirdly, in those circumstances, he will withdraw the amendment.
My Lords, the noble and learned Lord rightly indicated to your Lordships that I had said that I accepted that these measures were not connected with jury trial. However, I should not like the noble and learned Lord to think that I accepted the content of the latter part of the speech of the noble Lord, Lord Rooker, given on a previous occasion. The noble and learned Lord draws a number of parallels with the report of Sir Robin Auld. I must confess that I find some of Sir Robin's recommendations highly controversial.
However, so far as concerns the clauses at issue, and in response to the noble and learned Lord the Minister, I want to refer him again to Clauses 32(2) and 33(4). The final words of Clause 32(2) state:
"or ... direct the Crown Court to proceed afresh under section 6".
Clause 33(4) includes the words,
"direct the Crown Court to proceed afresh under section 6 if it believes the decision was wrong".
If it believes that the decision was wrong, it can refer to a whole range of considerations which go way beyond the two examples given by the noble Lord, Lord Rooker—which are judicial review or factual inaccuracy on the face of the record.
If these clauses are concerned only with judicial review and factual errors on the face of the record, and if the noble and learned Lord is prepared to accept that at the Dispatch Box, then I shall happily withdraw the amendment. But if the noble and learned Lord is not prepared to accept that, it suggests that a whole range of other issues may fall within the terms of the clause about which your Lordships have not been told. Therefore, I wonder whether the noble and learned Lord is prepared to stand up and say that the two examples given by the noble Lord, Lord Rooker, are the only matters to which these clauses are intended to refer.
My Lords, I would feel uneasy about committing myself to that now. It may be best to write to the noble Lord on the matter before Third Reading so that he can consider the position before then.
My Lords, I am entirely happy with that suggestion by the noble and learned Lord the Minister. My concern is that, if he wishes to go beyond the confines of the speech of the noble Lord, Lord Rooker, in my respectful submission, your Lordships' House should be told about it. I see the noble and learned Lord nodding. In those circumstances, I beg leave to withdraw the amendment. No doubt we shall consider the matter again at Third Reading.
My Lords, I must, first, apologise to the noble Lords, Lord Goodhart and Lord Thomas of Gresford, who tabled this amendment in Committee. I hope that they will forgive me for this plagiarism and bear in mind that imitation is the sincerest form of flattery.
The amendment relates to restraint orders under Clause 41. A restraint order will prohibit a person from dealing with any realisable property held by him in a way that will preserve that property pending some further order. There is a very low threshold for a restraint order. It need only be shown that a criminal investigation has been started and that there is reasonable cause to believe that the alleged offender has benefited from his criminal conduct. If that is shown, the Crown Court can make a restraint order that applies to all the realisable property held by the defendant.
There may, however, be exceptions to a restraint order, and specific exceptions are referred to in subsection (3). One of those exceptions is that the restraint order may provide for reasonable living expenses. However, subsection (4) provides that an exception to a restraint order must not provide for any legal expenses relating to the offences referred to in subsection (5), which are incurred by the defendant, or by the recipient of a tainted gift. The offences referred to in subsection (5) are entirely general.
We on these Benches are concerned that those two subsections will limit the quality of the legal representation available to a defendant. Although Criminal Defence Service funding is available to all criminal defendants, such funding is limited and may not be appropriate to the seriousness or complexity of the case against the defendant. It may be limited to junior counsel when a silk would be appropriate.
If a defendant cannot use any of his realisable assets to fund what he perceives to be the right level of legal representation, it is certain that he will feel that an injustice has been done, and there is a real possibility that that will, in fact, be the case. The most important person in any trial is the losing party and he must believe that he has been given a fair trial. If he cannot even use his own assets to oppose a restraint order, he will, quite rightly, feel that he has not been given a fair trial. I beg to move.
My Lords, my noble friend Lord Thomas of Gresford and I put our names to this amendment, and we are happy to support it. It certainly seems to me that it is not justifiable at the stage when a restraint order is made, and when it is plainly uncertain whether a confiscation order will be made or how far it will extend, to deprive the defendant of the right to use the money that is subject to a restraint order on proper legal expenses. Of course, there are perfectly well exercisable methods by which one can prevent those costs being unreasonable.
If there were no limit on the costs, I accept that it would be possible for them to be inflated artificially and ultimately used for the benefit of the defendant. But provided that the costs are kept within the normal limits of tax costs, I do not see why they should not be payable out of the property, subject to the restraint order.
I shall add one point of detail. If a confiscation order is made but does not extend to the whole of the defendant's property—that is not infrequently likely to be the case—plainly, the costs will be borne by the defendant if he pays them himself because no order has been made for payment of his costs by the Government. However, if those costs are payable from public money, the result would be that public funds would bear the costs of the defence.
My Lords, it may be of assistance if I were to set out how the position has changed during the Bill's passage through both Houses. Before charge, the defendant must use his own unrestrained assets first and may then apply for civil public funding. After charge, the defendant will be entitled to criminal public funding regardless of his means. That will cover all the related restraint and confiscation proceedings. The recipient of a tainted gift from the defendant must use his own unrestrained assets at all times and may then apply for civil public funding. Other third parties—persons who are not recipients of a tainted gift but who hold an interest in property also held by the defendant—may still have funds released by the court for their legal expenses and may also obtain civil public funding when they have exhausted their own assets.
In effect, the essence of the amendments is that we should be able to use restrained assets to fund the relevant proceedings, whereas what is proposed if all the assets are restrained is that legal aid will be made available. The essence of the point raised by the noble Baroness, Lady Buscombe, is that defendants will not get the legal representation they want if it is paid for by the state as opposed to being paid for out of their own assets. It has always been a principle that the quality of legal advice should not depend upon who is paying for it. Our proposal seems to be a sensible way to ensure that huge amounts of costs are not incurred on legal proceedings. A Rolls Royce service may not be in the public interest; a reasonable service might be. In those circumstances we believe that the solution we propose is fair and sensible. I invite the noble Baroness to withdraw her amendment.
My Lords, I thank the Minister for his response, which was a predictable repetition of the response we received in Committee. That is disappointing. We believe that the Government run the risk of defendants feeling that they have not had a fair "outing" because they are being constrained by the Bill in terms of the quality of the legal advice which they will receive. I do not want to press the House on this amendment. However, we would ask the Government to reconsider the matter before Third Reading. On that basis, I beg leave to withdraw the amendment.
moved Amendment No. 27:
Page 31, line 13, leave out from first "The" to end of line and insert "registration Acts"
My Lords, the amendments in this group are minor technical amendments. The main purpose of Clause 47 is to enable restraint orders affecting land to be given effect to at the Land Registry. The law on land registration has recently been updated in the Land Registration Act 2002, to which our Bill previously made no reference. The amendments simply modify our Bill to take account of the new arrangements in the 2002 Act. I beg to move.
moved Amendment No. 28:
Page 31, line 18, at end insert—
"(1A) The registration Acts are—
(a) the Land Registration Act 1925 (c.21);
(b) the Land Charges Act 1972 (c.61);
(c) the Land Registration Act 2002 (c.9).
(1B) But no notice may be entered in the register of title under the Land Registration Act 2002 in respect of a restraint order."
On Question, amendment agreed to.
moved Amendment No. 29:
After Clause 47, insert the following new clause—
"ORDER VARIED OR DISCHARGED
(1) This section applies if—
(a) the court varies or discharges a restraint order under section 42 otherwise than in consequence of the making of a confiscation order in the same proceedings; and
(b) an application is made to the court by a person who held realisable property and has suffered loss as a result of the making of the order.
(2) The court may order the payment to the applicant of such payment as it believes is just.
(3) Compensation payable under this section is payable by the Lord Chancellor."
My Lords, Amendment No. 29 requires a court to consider the payment of compensation where a restraint order is varied or discharged. We have debated the general principle of compensation for loss suffered by an innocent third party as a result of government action against a creditor, and I shall not repeat that argument.
However, I want to raise briefly a particular point. Compensation is provided for under the Bill where the confiscation order is varied or discharged. Why therefore is it not where a restraint order is made, varied or discharged without the case having proceeded to the making of a confiscation order? Surely, the arguments here are just as strong. I beg to move.
My Lords, we are opposed to the amendments in this group for the cogent reasons which my noble friend Lord Rooker expounded in Committee.
Restraint and receivership have always been treated as ancillary to a criminal proceeding. As a result, the criminal rules on compensation apply. That is to say, compensation is payable only where there is a serious default on the part of the enforcement authorities. It is interesting to note that that has always been the case even though restraint and receivership are currently High Court functions and thus technically civil. Now that those proceedings are being transferred to the Crown Court, the case for applying the criminal rule is stronger than ever.
It is also interesting to note that the courts have recently endorsed that approach in the case of Hughes and Another and R and Another, which was decided by the Court of Appeal at the end of last month. That case dealt with the issue of whether it was compatible with the European Convention on Human Rights that receivers should be able to pay their expenses out of the assets which they were managing. Lord Justice Simon Brown acknowledged that an acquitted or unconvicted defendant had for those purposes to be treated as an innocent person, but he did not accept that, for that reason, it had to be regarded as disproportionate to leave the defendant against whom restraint and receivership orders had been made uncompensated for such loss as they might have caused him.
He held that because acquitted defendants are not generally entitled to compensation for deprivation of liberty or other loss suffered through prosecution, they should not be entitled to compensation for loss suffered through restraint and receivership action. He stated
"In my judgement it is no more unfair, disproportionate or arbitrary that they should be uncompensated too for any adverse effects that restraint and receivership orders may have had upon their assets".
This Government have no intention of paying compensation to persons affected by the lawful exercise by the law enforcement authorities of their statutory responsibilities. We have serious concerns as to the potential implications of the amendments for the operation of the criminal justice system in general. If compensation was payable whenever the authorities started a criminal investigation or proceedings and then failed to secure a conviction, it would not be long before the criminal justice system ground to a halt.
As regards the specific point made by the noble Lord, Lord Goodhart, compensation is available only where a confiscation order made in absentia against an absconder is varied or discharged under Clause 73. In the light of those comments, I hope that the noble Lord will feel able to withdraw the amendment.
moved Amendment No. 31:
Page 48, line 22, at end insert "and the defendant has benefited from the conduct which constitutes the offence"
My Lords, these government amendments—one group of which discharges an undertaking that I gave in Committee—make detailed but worthwhile changes to the criminal lifestyle regime. Amendments Nos. 31, 59 and 85 make it clear that a defendant who commits an offence lasting six months or more must have benefited from the offence to be treated as having a criminal lifestyle.
The six-month test is currently inconsistent with the other criminal lifestyle tests. In theory, it is possible for a person who commits an offence lasting six months or more to be treated as having a criminal lifestyle for the purposes of the Bill, even if there is no acquisitive element to the offence.
The principle underlying the Bill, however, is that a criminal lifestyle is a lifestyle of acquisitive crime. All the other criminal lifestyle tests either require explicitly that the defendant shall have benefited from the offences of which he or she has been convicted, or those offences are inherently acquisitive. We believe that it would be sensible to bring the six-month test in line and, in so doing, to correct an unnecessary anomaly.
Amendments Nos. 34, 62 and 86 bring us to the subject of terrorism. As some of your Lordships may recall, we made it clear in Committee that we did not think terrorist fund-raising offences should be defined as criminal lifestyle offences, because they were not normally indicative of a lifestyle of acquisitive criminality. While we must remain alert to the need to take any possible action against terrorism, that should not be at the expense of undermining the fundamental policy of the Bill.
However, as I explained in Committee, we have considered whether other terrorist offences might be specified. As your Lordships can see, we have reached the conclusion that those convicted of the offence of directing a terrorist organisation should be treated under the Bill as having a criminal lifestyle.
The offence has been selected after careful thought and consultation with the relevant enforcement authorities. The overwhelming majority of those convicted of this offence in the United Kingdom will have been involved in Northern Irish terrorism. With that in mind, we are satisfied that the offence falls within the concept of a criminal lifestyle offence, as understood by the Bill. It will be reasonable to assume that those convicted of the offence will normally have been involved in acquisitive crime for their own benefit. It is proposed, therefore, to add this offence to the list.
I hope, and am confident, that your Lordships will find both sets of amendments to the criminal lifestyle regime sensible. I commend them to the House, and beg to move.