Clause 2 - Functions of SOCA as to serious organised crime

Serious Organised Crime and Police Bill – in a Public Bill Committee at 3:30 pm on 11th January 2005.

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Question proposed, That the clause stand part of the Bill.

Photo of David Heath David Heath Shadow Spokesperson (Home Affairs)

At the risk of labouring a point beyond anything that is reasonable, I wish to draw attention to the dissimilarity of subsections (3) and (4), which deal with the commissioners and rightly contain a requirement to act in agreement on revenue fraud. Under subsection (3), there is a further and, in my view, otiose requirement for SOCA to act if the Serious Fraud Office declines to act, which does not apply with regard to revenue fraud. Such matters bolster my case for re-examining the issue. Does the term ''commissioners for Her Majesty's Revenue and Customs'' mean anything or is it, as I suspect, dependent on the passing of a separate Bill, which we cannot be assured will pass through Parliament and receive Royal Assent at this stage?

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Home Affairs)

Creating SOCA for its own sake is not a reason in itself for doing so. As of yet, the Minister has not adequately set out the Government's intentions. The question is not so much how SOCA will work, but how its functions will deal with the particular problems that society faces and which now give cause for the agency to be created. In other words, what are the functions of SOCA? What is its purpose?

We know, for example, that drugs use has shot through the roof in recent years. We know that more British children try drugs than do children in any other European country. We know that a dose of cocaine is half the price that it was 10 years ago. How will the agency stop that? What is it that we now do wrong that SOCA will correct? As I said before, just because the Conservative party supports SOCA, it does not mean that we, and the Committee as a whole, should not question its function and how it will solve the problems we face. That is the purpose of the criminal law.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

I take this opportunity to deal briefly with the relationship between SOCA and the Serious Fraud Office, as recognised explicitly under clause 2. I apologise to the Committee and the Minister for the fact that I could not be in Committee for the whole of this morning's sitting, as a result of which I did not hear my hon. Friend's explanation of the exclusion of the SFO from SOCA, pursuant to the amendment tabled by the Liberal Democrats.

On reflection, I agree entirely with the formal exclusion of the SFO from SOCA on purely practical grounds. Apart from the potential for disruption, the SFO pursues serious, sophisticated and financial crime, which, albeit very organised, does not generally involve violence. Indeed, its exclusion from SOCA acknowledges the fact that the pursuit of fraud might be diluted among all the other priorities that SOCA will have to pursue. Nevertheless, there are serious potential overlaps between their work, not least in respect of the laundering of the proceeds of crime. I am thinking, albeit not exclusively, about the operations of Russian crime syndicates and drugs syndicates.

Clause 2 explicitly acknowledges those overlaps in the reference to the responsibility of SOCA to liaise with the SFO. I also welcome the apparent extension of plea bargaining to the SFO, which the Committee will come to later. Notwithstanding the statutory responsibility on SOCA to liaise with the SFO on matters of fraud, the two agencies will clearly have to work closely in practice to ensure that the liaison happens the other way around, as clause 2 contains no reciprocal duty. They will also have to work closely to ensure that intelligence is shared, that there is effective international co-operation with agencies such as the FBI and that the two agencies generally co-operate rather than compete where their functions overlap.

The SFO has long experience of the use, the advantages and the practical limitations of the section 2 interview powers that are now being envisaged for SOCA. It is experience that the SFO should clearly share with SOCA. When I was a financial journalist pursuing money laundering, fraud and financial crime, the SFO was generally known as the ''Nightmare on Elm Street'', a name derived from its headquarters off Gray's Inn road. It is important that the lessons are learnt so that SOCA does not become the nightmare on Parliament square.

Photo of Caroline Flint Caroline Flint Parliamentary Under-Secretary (Home Office) 3:45 pm, 11th January 2005

Clause 2 lays the foundations for the organisation of SOCA's functions in respect of serious organised crime. I am not sure whether the hon. Member for Huntingdon has read the White Paper that we produced and widely consulted on, which dealt with why we are establishing the Serious Organised Crime Agency, but if he has not, he should have a look. If he has read it, he should have another look. That document contains extensive arguments about the nature of organised crime and how it manifests itself. It talks about the harm caused by organised crime and why we have reached the point where we feel that, despite the good work carried out by those individuals who work for the NCS and NCIS, those who work on drug investigations in Customs and Excise and those in the immigration crime unit who deal with the heartrending personal tragedies of human trafficking, there is consensus in principle that the organisations and the people within them could do even better under one organisation. That is a simple answer to a difficult and complex question.

The law enforcement activity surrounding criminal entrepreneurs requires some of the traditional powers of police officers, but it also requires an number of different approaches to intelligence and harm reduction. The hon. Member for Somerton and Frome quoted an article in The Independent and subsequently in the Daily Mail in reference to the way in which organised crime is debated in our media. I have not read the full article—I shall do so—but I think that it is important to appreciate and understand how the harms of crime, locally, regionally or nationally, are perceived by the public and impact on them.

Sometimes, we politicians or those involved in law enforcement may feel that we know the right areas to investigate and pursue. However, we might not have the impact that we want in supporting communities and individuals. That is why one of the step changes reflected in the rationale of SOCA is that, although we are not taking our eye off the ball of the serious criminal offences in which some of those whom we would like to see behind bars are involved—drug smuggling, people trafficking, bringing arms into the country, the distribution of weapons—we are considering how we can frustrate their networks and disrupt their organisations. In addition, if appropriate, we are considering how to establish whether such people are involved in other, level 1, crimes. In the short term, the immediate priority is to tackle such people and take them out of action, rather than wait—perhaps for many years—before going for one individual who might be protected and sheltered from our investigation in all sorts of ways. Such approaches are important when we consider the harms and the impact on communities. The Home Office is certainly   not arguing that the priorities for SOCA should be dictated by column inches in newspapers. However, we should be mindful of how the public perceive organised crime.

Many people may not even see the connection between what happens to them in their communities and organised crime. A good example of that is money laundering. Ordinary members of the public may go into a shop, buy goods and not realise that that enterprise is a front and that they have unwittingly become part of the laundering of money in the wider community.

Photo of David Heath David Heath Shadow Spokesperson (Home Affairs)

I recommend that the Minister look at the interview in The Independent. The words that I used were not mine, but Sir Stephen Lander's. Clearly, he had formed the impression from debates with the Home Office that he was to be judged on quantitative terms—column inches—rather than on the qualitative terms that the Minister is now expounding. That is a very alarming prospectus for the new organisation.

Photo of Caroline Flint Caroline Flint Parliamentary Under-Secretary (Home Office)

I shall look into the issues raised by the article.

Photo of Vera Baird Vera Baird Labour, Redcar

I have the article here. Sir Stephen says:

''The brainboxes in the Home Office have been putting together a sort of harm model. The model basically articulates the harm that is caused to the UK under a number of headings: the rewards taken and made by the criminal; the social and economic harm to the UK; the institutional harm—corruption for example and illegal immigration—and tries to put a cost on them. It also brings into play judgements about the degree of public concern and they have a proxy for this, which is the amount of column inches in the press.''

The hon. Member for Somerton and Frome went on to quote Sir Stephen saying,

''Which is not quite right'', and he made a great point of that. However, Sir Stephen said:

''Which is not quite right but is probably as good as you will get. It is pretty rough and ready but it is asking the right questions. It is asking not, what is the incidence of something, but what is its impact.''

It is a good idea to quote someone in full rather than in part.

Photo of Caroline Flint Caroline Flint Parliamentary Under-Secretary (Home Office)

I thank my hon. and learned Friend for that intervention, which proves that anything can mean anything if it is taken out of context.

We should be aware of and brave about the fact that for the first time we are trying to find a way of identifying different harms to communities and society and addressing them in a meaningful and accountable way. By serious and organised crime, we generally mean criminal activities across national borders carried out in conjunction with others to produce substantial profits. We have not defined that in the Bill, as SOCA will not have an exclusive remit on the issues that it is tackling; it will also need to engage with agencies dealing with more localised criminal activities. In its focus on reducing the harm caused by serious organised crime, SOCA will need to make a judgment about the most effective use of its resources.   We do not want to set artificially restrictive definitions. In practice, SOCA will respond to the strategic priorities set by the Secretary of State under clause 9, which will reflect the views of the Cabinet Committee on Organised Crime.

As I said before, SOCA will take the place of four organisations or parts of organisations in tackling those important areas of criminality. However, this is not just a machinery of government-type change that brings them together for administrative convenience. However good each of the bodies may be in its own right, the reality is that they are operating according to priorities and performance management regimes that treat them as single bodies. They cannot be as effective as a single body, which can focus its combined resources on a single strategy. SOCA will work in a fundamentally different way to its predecessors. Its prime concern, and the ultimate purpose of the organisation, is reducing the harm from organised crime. Criminal convictions and seizures of drugs will of course be an important component, but as I said, we are also looking at ways to disrupt illegal business through other means, such as by pursuing a major operator for tax evasion or by hardening the targets that criminals are attacking. Most important, SOCA will be a genuinely intelligence-led organisation. Real knowledge and understanding of the problems must be its first responsibility. That in turn will drive decisions about which activities to target and the best means of attacking them.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Conservative, Cotswold

The Minister says that the organisation will work with other agencies. Could she put a little more flesh on those bones? She has just said that it will need to have very close links with other bodies. I presume she means links with the intelligence agencies—or will SOCA have its own intelligence function? Will it work with Interpol and Europol; if so, how and how closely? I am talking about international crime-fighting functions. Could the Minister please tell us a little more about how that will work?

Photo of Caroline Flint Caroline Flint Parliamentary Under-Secretary (Home Office)

If the hon. Gentleman will not take offence, I will just say that I do not want to take up time on issues that come under later clauses. All the issues that he raised about intelligence-sharing, the agencies that SOCA will work with, whether those agencies are in the United Kingdom or overseas, and mutual assistance will be dealt with in detail under other clauses. I hope that I can continue and return to those points later.

In short, as the clause makes clear, SOCA will be engaged in preventing, detecting and reducing serious organised crime and limiting the harm that it causes. Crime does not organise itself neatly; lifestyle criminals are often involved in serious complex fraud or revenue fraud causes, and those engaged in organised crime are hardly likely to provide genuine and accurate tax returns about their ill-gotten gains. The investigation of those involved in drug trafficking or people smuggling might naturally lead SOCA into areas of fraud and we want to be able to continue to   pursue such matters if SOCA is to live up to its objective of relentlessly pursuing serious organised criminals.

Both the hon. Member for Somerton and Frome and my hon. Friend the Member for Newcastle-under-Lyme made comments about the Serious Fraud Office. On one of the points that the hon. Member for Somerton and Frome raised, I will look at the drafting of clause 2(3)(b) and consider it, but I do not want to commit myself any further. I know how particular he is about the wording of legislation.

Photo of Caroline Flint Caroline Flint Parliamentary Under-Secretary (Home Office)

Yes, it is, and I hope that I will have some rewards for the hon. Gentleman down the line. He is also right about the commissioners. We must make sure that the legislation sits neatly with other measures being dealt with by other Departments.

On the point raised by my hon. Friend the Member for Newcastle-under-Lyme, we had a discussion on the matter this morning. As he is aware, serious complex fraud and revenue fraud are primarily the responsibilities of the Serious Fraud Office, as well as the Inland Revenue and Customs and Excise, which will be Her Majesty's Revenue and Customs in future. As I said this morning, we do not want to duplicate those bodies' activities, so SOCA will only investigate organised revenue fraud with the agreement of the commissioners.

We thought about the making Serious Fraud Office part of SOCA. We believe that we are being radical and ambitious in creating such a structure with the organisations and parts of organisations that are currently coming together in SOCA, but we will keep under review how it is working, as well as how the nature of criminality changes. I gave some examples this morning of the sort of cases that the SFO looked into in 2003-04, and they do not really sit neatly with the SOCA framework. I hope that my hon. Friend is reassured on that point.

SOCA might wish to undertake activities directed at reducing the harm caused by revenue and serious or complex fraud through non-enforcement routes, for example by disseminating information to financial institutions on combating types of fraud. I am pleased to have visited the National Hi-Tech Crime Unit and seen the work that it does on financial crime. That work is an important part of our endeavours to deal with a much more 21st-century approach to the use of the internet in hacking into and thwarting financial systems. That unit does a good job.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Home Affairs)

Is the Minister suggesting that SOCA will take responsibility for the National Hi-Tech Crime Unit? I know that the paedophile online investigation team is important for the Internet Watch Foundation, which deals with child pornography.

Photo of Caroline Flint Caroline Flint Parliamentary Under-Secretary (Home Office) 4:00 pm, 11th January 2005

The unit will form part of SOCA. In relation to the paedophile unit, we are reviewing aspects of work that is currently undertaken by some organisations to see how and whether they would fit   into the new structure. I cannot be more definite at the moment, but we are considering a number of issues in terms of paedophile activity and wildlife crime, animal extremists and other areas. We are considering the nature of those crimes, how they fit into the concept of serious and organised crime and which organisation is best directed to carry out the work of tackling them, but we have not ruled any of them in or out.

Photo of David Heath David Heath Shadow Spokesperson (Home Affairs)

I am not asking the Minister to pre-empt the conclusion of those discussions, but it would be helpful if the net were to be extended to the national functions carried out by the Metropolitan police, because as she knows it has several specialist units that provide a national service in a number of areas that might usefully be incorporated into SOCA and available to the rest of the police service, rather than being funded by the London council tax payers.

Photo of Caroline Flint Caroline Flint Parliamentary Under-Secretary (Home Office)

I hear what the hon. Gentleman says, but another argument might be that those units are doing well in the Met, therefore it does not necessarily follow that they should be put in SOCA. However, we are considering all the functions and how they will relate to SOCA in future. I should not like any hon. Member to leave the Committee thinking that we do not think that those areas are not important in their own right. We are mindful of that.

Other Government Departments and agencies may be responsible for areas that are targeted by serious and organised crime, including counterfeit medicine and DVD piracy, which provide opportunities for criminal enterprises operating internationally. Work carried out to frustrate such activities will still need to involve the responsible bodies, but the extent to which SOCA becomes involved will have to reflect the seriousness of the harm that is caused at any particular time.

Wherever the boundaries of SOCA's activities are drawn, it will need to have a close, effective working relationship with agencies on the other side. In creating SOCA we intend to reduce the number of organisational boundaries and set up arrangements that ensure that the UK endeavours to provide the most hostile environment possible for serious and organised crime.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.