Lord Cromwell:

Moved by Lord Cromwell

482: After Clause 196, insert the following new Clause—“Report: economic crime fighting fund(1) The Secretary of State must undertake an assessment of the viability, and potential merits, of establishing an economic crime fighting fund based on the principle of reinvesting a proportion of receipts resulting from economic crime enforcement into a pooled fund for the purposes of providing multi-year resourcing for tackling economic crime.(2) The assessment specified in subsection (1) must also examine the impact of budget exchange rules on the functioning of the asset recovery incentivisation scheme. (3) In carrying out the assessment, the Secretary of State must consult such persons as they consider appropriate.(4) The Secretary of State must publish and lay before Parliament a report on the outcome of the assessment by the end of the period of 12 months beginning with the day on which this Act is passed.”

My Lords, today we have discussed at length some very important issues that are also pretty bleak. It has been lightened for me only by hearing the noble Lord, Lord Jackson, referred to as neutral, which is not an epithet that I would normally attach to him. I am sorry that he is not in his place. I hope that my operational Amendment will conclude with a more positive and optimistic outcome.

I thank the Minister and his officials for meeting me to discuss this amendment, along with Labour MP Phil Brickell who, with the support of the APPG on anti-corruption, championed this amendment in the Commons. I am also grateful to that APPG for the excellent policy note it provided to the Minister following our meeting. I thank the Minister also for his helpful subsequent letter of 9 December. I thank the noble Lord, Lord Hogan-Howe, and the noble Baroness, Lady Jones of Moulsecoomb, for their kind support and for adding their names to the amendment. The noble Lord, Lord Hogan-Howe, wanted to be here but has been called away. He did, however, give me a statement, from which I will quote briefly when it is apposite.

The purpose of the amendment is to include in the Bill a requirement to undertake a viability study of the establishment of an economic crime fighting fund. I am mindful that this is Committee so I will mention only the following three summary points about the amendment. First, there are two statistics to illustrate the scale of the problem. Economic crime overall currently costs the UK £350 billion a year. That is equal to 17.5% of GDP, but we spend less than 0.05% of GDP tackling it. Also, of the £100 billion in illicit financial flows alone each year, law enforcement recovers only some 0.2%.

Secondly, crime-fighting agencies are currently trapped in a cycle of underfunding. The 2024 Civil Service survey found that only a third of National Crime Agency staff thought they had the necessary tools for their job, the lowest percentage of all 107 public bodies surveyed. This lack of funding limits vital recruitment, damages effectiveness and crushes morale. Meanwhile, despite fraud accounting for 43% of all reported crime last year, fraud prosecutions were down 50% on the 10-year median level.

Thirdly—this is where the fund comes in—despite the underfunding in the face of the almost overwhelming level of economic crime, the agencies still manage to generate an average of £566 million per year in fines and recovered assets. However, most of that £566 million recovered per year is not reinvested in fighting economic crime. Instead, most of it goes to the Treasury and the Home Office. Redirecting even a fraction of these funds to the key agencies fighting economic crime would be transformational.

This amendment would simply require a very timely viability assessment of enabling these agencies to break out of the current negative funding cycle, to fight more economic crime and to gain long-term sustainable funding for their vital work. Please note that the taxpayer would pay nothing. The funding would be paid for by the confiscated proceeds of crime—rather poetic justice.

I clarify the following points, which arose in discussion of the amendment after Second Reading. First, the fund would be wholly separate from victim compensation and would not alter the status quo in that area. There are also many cases where economic crime cannot be linked to specific victims—for example, where a criminal is laundering money from a drug-dealing gang.

Secondly, this is not a new or unique idea. All 13 supervisors for the accountancy sector retain penalties imposed for anti-money laundering breaches. The Ministry of Justice is permitted to retain part of the value of fines and fixed penalties collected, amounting to nearly £360 million in the financial year 2024-25. The FCA is allowed to retain a proportion of fines. This amounted to £71.6 million in the same period. These are just some UK examples. There are numerous other precedents of fines being reinvested, in the UK and internationally.

Thirdly, the current system is opaque and subject to the dreaded annularity rules, meaning that any money which the agencies retain must be spent by the year’s end or it is taken away. This encourages some truly bizarre behaviours to use up the money in time. One example we discussed with the Minister in our meeting was a sponsored yacht race.

There is also a specifically British wrinkle here. Police forces, as Crown servants rather than civil servants, are subject to different accounting rules. Thus the Met can keep some of the seized cash and spend it over multiple years, allowing it to plan and use it strategically. I quote the noble Lord, Lord Hogan-Howe:

“The police force has been able to take a share of the criminal assets they seize, should a court so decide. Everyone accepts that the amount seized is a small fraction of the criminal assets out there. The police’s share of money is pooled in the Treasury and then returned to the forces—albeit that this process often takes 1-2 years. Nevertheless, this allows the police to invest in discovering and seizing further criminal assets”.

However, unfortunately, the National Crime Agency, the Serious Fraud Office, HMRC and the Crown Prosecution Service cannot do this. They are, as mentioned, captured by Treasury rules that require central government bodies each year to return what they have not spent. This confused and chronic underfunding cannot continue.

While I welcome the Government’s anti-corruption strategy and their interest in improving the economic crime levy and the ARIS systems, recent discussions with HMT and other officials suggest that they are not going to do anything substantive to move forward, claiming there is a lack of data from law enforcement agencies on the return on investments from the use of these funds. I therefore suggest to the Minister that consultation on the viability of the fund that the amendment proposes would be the right opportunity to speed up the frankly glacial progress made so far on data collection in the Home Office.

Finally, I remind the Minister and the Committee of two things. First, the amendment would not require the fund to be established, but simply that its viability be examined. Secondly, there was and is wide cross-party support for the amendment in the Commons. Details of this support have been provided already to the Minister. I therefore ask him the following question. If, as he may indicate in response, he or the Government consider that such a viability study could be undertaken without legislation, will he commit from the Dispatch Box today to implement such a study and tell the House when it can be expected to start and to report?

I give the last word to the former director of the National Economic Crime Centre, Adrian Searle:

“Substantive and sustained funding … is crucial. The resource currently deployed is not commensurate with the scale of the problem … Doing the necessary analysis appears to be a no brainer”.

I look forward to any comments from others and hope for a positive response from the Minister. I beg to move.

My Lords, I do not normally get involved with money issues because they are too messy and convoluted. The last time I recommended any sort of money being given to the police was when I was on the Metropolitan Police Authority. It was going to scrap the wildlife crime unit, and I argued strongly that we should keep it. It was not about naughty squirrels; it was about people committing crimes against wildlife. I felt it was an incredibly important unit, but that is by the by.

This is a growing crime. I can remember discussing it 20 years ago and people saying, “We need more money to fund the work and we need better systems”, and all that sort of thing, so it is surprising that we need this now after so long. It addresses a persistent weakness in our response to economic crime—the lack of stable long-term funding. Economic crime undermines public trust and causes real harm to individuals and communities, yet the agencies tasked with tackling it are often operating on short-term budgets, dependent on annual settlements and unable to plan effectively. This Amendment asks the Government to undertake a serious assessment of whether a proportion of the proceeds recovered from economic crime could be reinvested into a fund to strengthen enforcement. That strikes me as an incredibly sensible approach; it would also stop the Treasury from grabbing the money and using it in even worse ways.

Economic crime is becoming more complex, international and sophisticated. We ought to be on the front foot in tackling it. This amendment would help ensure that those fighting economic crime are properly resourced and able to plan ahead.

My Lords, economic crime is not a marginal issue. It is a national crisis affecting millions of people every year but, generally speaking, it goes under the radar most of the time. These are not victimless offences: they destroy life savings, devastate small businesses and undermine trust in our economy and democracy. When economic crime goes unchecked, it is not the powerful who suffer but ordinary people.

The Amendment is modest and pragmatic. It would not establish a new fund; it simply asks for a viability study. I know the Minister is never keen even on turning a semicolon into a comma but, in this instance, it is not asking an awful lot of the Government—the Minister must stop stabbing his heart—just to agree to look at a viability study. It is really not a big deal. There are already clear precedents for this approach, as the noble Baroness, Lady Jones, just said; the FCA, the Ministry of Justice and parts of the police are already able to retain fines in different ways. If the Government are really serious about the UK’s reputation as a global financial centre, they must match rhetoric with resources. Can I persuade the Minister, for once, to move and just say yes?

My Lords, I thank the noble Lord, Lord Cromwell, for moving this Amendment. Economic crime is one of the most pervasive threats to public trust and business confidence in the UK. In the year ending March 2024, fraud accounted for around a third of all crime recorded by police. Industry estimates suggest that economic crime costs the UK economy tens of billions of pounds per year, according to police statistics. These staggering statistics underscore the need for effective enforcement and resourcing.

In this context, the need to seek more sustainable and predictable resourcing for economic crime enforcement is understandable. The proposal to assess the viability of an economic crime fighting fund based on reinvesting a proportion of receipts from enforcement reflects a desire to tackle this persistent and widespread issue. I recognise that there may be merits to an approach that allows specialist technology and expertise to be built and retained over multiple years.

The amendment also calls for an examination of the impact of budget exchange rules on the functioning of the asset recovery incentivisation scheme. There have been reports that recovered assets sometimes cannot easily be redeployed by front-line investigators and that incentives can be blunted by accounting constraints. If funds that are recovered through enforcement cannot, in practice, be retained or redeployed effectively by those doing the work, it is sensible to ask whether the current framework is optimally aligned with the policy objective of strengthening economic crime capability. However, I recognise that any move towards hypothecation of enforcement receipts raises potential governance issues, and there is also the question of how such a fund would sit alongside existing funding streams and the Government’s wider strategy in this area.

I therefore look forward to the Minister’s response to this amendment. I would be grateful if he could outline what steps the Government are currently taking to fight economic crime and whether they believe that any further action is required.

I am grateful to the noble Lord, Lord Cromwell, not just for his Amendment today but for his patience in sitting through the Committee debates prior to introducing his amendment this evening. I am also grateful for the meeting we had with him and Phil Brickell, MP for Bolton West, in October and the meeting we had on 18 November.

It is important that Amendment 482 is considered. It would require the Government to consult on the viability of a ring-fenced economic crime fighting fund, and the intention of the amendment is to examine whether such a fund could provide multi-year resourcing for tackling economic crime. I am grateful for the comments from the noble Baronesses, Lady Doocey and Lady Jones of Moulsecoomb, in support of the amendment. The amendment recognises the significant harm that economic crime causes—reflected in the contributions made—to individuals, businesses, the economy and wider society.

The Government remain committed to tackling economic crime. That is evidenced not just by words in this Chamber but by our continued investment through the asset recovery incentivisation scheme and the economic crime levy, which has allocated £125 million to tackling economic crime in recent months. These schemes are delivering state-of-the-art technology to provide law enforcement agencies with the tools they need to stay ahead of criminals. It also includes an important factor, which is the recruitment of 475 new officers across the threat leadership, intelligence, investigative and prosecution capacity. We are putting people on the ground to deal with this issue as part of the, we hope, tangible benefits that we can get in the fight against economic crime. As a Government, we want to continue to work with our partners to ensure that we are most effectively investing the funding available.

I understand and accept—and did so in the face-to-face discussions we had with the noble Lord, Lord Cromwell, and the Member of Parliament Phil Brickell—that the call for sustaining funding is an important one that needs to be investigated. I want to confirm to the noble Lord what I hope is of help to him: the Government are committed to exploring the funding landscape with the aim of strengthening economic crime enforcement. This is witnessed by the statements we have made in the recently published economic anti-corruption strategy, which was published last December —particularly paragraph 42, on page 23, which I quote for the noble Lord:

“In the context of Spending Review 2025”,

we will

“explore the funding landscape with the aim of strengthening economic crime enforcement” as a joint Treasury and Home Office priority commitment in that anti-corruption strategy.

This strategy is fixed and there was a timescale for it when published. I hope that the noble Lord, Lord Cromwell, will accept our intentions in identifying the issues that he has raised and not just doing what we have done to date, which is to ensure that we have put resources in already. I hope that that review commitment in the strategy from December is of help to the noble Lord regarding the objectives of his amendments here today.

With that commitment, I would be grateful if he would at least welcome it and hold us to account on it and, in doing so, withdraw his amendment today.

First of all, I can certainly promise to hold the Minister accountable for it, so I hope that pleases him. I thank the speakers—the noble Baronesses, Lady Jones and Lady Doocey, and the noble Lord, Lord Davies—who have kindly commented on this Amendment. I thank the Minister in particular for engaging with me before and for his comments tonight. I am still not quite sure what I am looking at. I think he used the phrase “exploring the funding landscape” a couple of times. When does that exploration reach its destination and come up with a report?

We have the strategy, which was published in December. It is a fixed-term strategy, which includes the commitment to examine the points that the noble Lord has mentioned. My time is quite stretched at the moment but, if the noble Lord would find it helpful, I am very happy for him to meet officials dealing with that aspect particularly. We can potentially explore from there whether his input is helpful in stretching that strategy and making some positive outcomes from it.

I thank the Minister for that answer. I was described in a previous debate as a legislative terrier, so I can assure him that I would like very much to meet his officials and, if necessary, nip their heels, because I am after a date when we are going to find the result of this viability study. Let us leave it at that. I am very grateful for his positive response. On that basis, I beg leave to withdraw my Amendment.

Amendment 482 withdrawn.