Clause 69 - Financial reporting orders: making

Serious Organised Crime and Police Bill – in a Public Bill Committee on 13th January 2005.

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Amendment moved [this day]: No. 201, in clause 69, page 40, line 14, leave out 'a magistrates' court or'.—[Mr. Djanogly.]

Question again proposed, That the amendment be made.

Photo of Mrs Marion Roe Mrs Marion Roe Conservative, Broxbourne 2:30 pm, 13th January 2005

I remind the Committee that with this we are taking the following amendments: No. 202, in clause 69, page 40, line 39, leave out subsection (6).

No. 203, in clause 70, page 41, line 2, leave out from first 'the' to 'Court'.

No. 204, in clause 70, page 41, line 18, leave out subsection (6).

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

This important issue, which I am sure all hon. Members will recollect, is not, unfortunately, addressed in the Bill. Basically, the Bill gives the courts the right to do whatever they like within a five to 20-year period for Crown courts and a five-year period for magistrates courts. That power needs to be further curtailed, even within the context of the list of offences in the clause.

I appreciate that it is a difficult issue. If someone is found guilty of obtaining property by deception, for instance, that does not necessarily mean that the amounts involved were significant. If very small sums were involved, a financial reporting order may be suitable for only a very short time, and it is questionable whether it would be suitable at all. Parliament should take more responsibility on this and the amendments set out our suggestions on how to go about that.

We have avoided formulae, or different terms for different crimes. Rather, we have looked at the court involved in the process, while bearing in mind that the Bill is meant to be about serious crimes. If the crime is dealt with by a magistrates court, where sentences must be for less than one year, the court should not have the right to issue financial reporting orders. Indeed, in deciding whether to send the case to a higher court, magistrates should bear in mind the likelihood that an order will have to be issued. Such orders are likely to be fairly difficult to get right, and one has to wonder whether the average magistrates court has the expertise to judge them. I should have thought that such things belonged in a Crown court.

Finally, there is the question of the practicalities. At present, the accused is asked before sentencing in a magistrates court to fill in a form outlining his income and expenses. In the real world, however, such forms are usually filled in lightly and in a rather haphazard   way. For the most part, that does not really matter, because the vast majority of fines in a magistrates court will be minor. Indeed, that is the whole purpose of magistrates courts, which can hand out quick and cheap justice for mainly minor crimes. Introducing the concept of considering future finances could well be an administrative nightmare for the average magistrates court. For that reason, we have tabled the amendments.

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

I have some sympathy with the amendments, and I had intended to raise the issue in the clause stand part debate. I have no problem with the principle behind the financial reporting order procedure that the Government propose. The order is a potentially useful tool, but it is also a very substantial and potentially intrusive tool as far as an individual's privacy is concerned. It must be proportionate to the crime of which that person has been convicted.

The danger does not lie in the application of such orders by the Crown court, and we can be reasonably assured that the level of offence involved and the consideration given in such courts will be appropriate. Without in any way denigrating the powers or the responsibility of magistrates courts, however, the offences that are usually tried before them—irrespective of whether such offences fall within those listed in subsection (3)—are not such that one would normally consider a financial reporting order to be commensurate. There is a real issue of proportionality. The Minister may be able to convince me that there is a need for magistrates to have this power, but we need to hear that argument.

The same, of course, applies in Scotland. I think that the amendment to clause 70 tabled by the hon. Member for Huntingdon (Mr. Djanogly) is slightly defective in its phrasing, but nevertheless exactly the same arguments apply to the sheriff in Scotland, in relation to the level of criminality that is the subject of the trial.

Mr. Tony McWalter (Hemel Hempstead) (Lab/Co-op) rose—

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

I give way to the hon. Gentleman because he is such good value.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead

I want to have just one more go without being slagged off, as I was this morning. It is obvious that a relatively trivial offence is sometimes the tip of an iceberg and creates a suspicion that the fact that a person has been caught with his hand in the till is not a one-off but part of a sophisticated operation that merits the name ''serious organised crime''. It is that suspicion that precipitates the provision that we are considering. Does not the hon. Gentleman understand that that is exactly what is needed to get to grips with what is happening in organised crime?

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

Even if I thought that ''slagging off'' was a parliamentary term, I am sure that I would never have applied it to the hon. Gentleman, but I understand his point: a process of investigation of serious crime often starts from a small beginning. However, he must understand that the penalty for someone else's major offence cannot be imposed on a   minor offender. The person who, in his example, has inadvertently been trapped in a web of crime is the person who will be subject to a financial reporting order. That is where the proportionality issue arises. We may hear arguments from the Minister explaining why that should be, but I want him to consider whether, even in the instance suggested, the reporting order is appropriate to the level of criminality of the individual to whom it is applied.

That is the crux of the issue. We are not talking about Mr. Big making a report on his financial transactions, which would achieve exactly what the hon. Gentleman wants. We are talking about Mr. Little, who has been convicted of a minor crime, for which he may not even have received a custodial sentence, being required to fulfil the onerous responsibility of financial reporting on all his transactions for many years. We should think seriously about that when it concerns someone who has been convicted of a minor offence.

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

The hon. Member for Hemel Hempstead (Mr. McWalter) made a fair point, but in the example that he suggested, the magistrates court would refer the minor issue to the Crown court. It is a fair point. It does happen that small issues arise with important consequences. In that instance, the matter would be referred to the Crown court, so the issue remains valid.

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

That is a helpful intervention, and the hon. Gentleman is right. The court level at which a case is heard is a rough and ready guide to the severity and importance of the offence.

Mr. McWalter indicated dissent.

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

The hon. Gentleman shakes his head, but I shall not slag him off; I simply express disagreement with him.

Photo of Vera Baird Vera Baird Labour, Redcar

I should not have thought that anyone would want what the hon. Member for Huntingdon (Mr. Djanogly) recommends: the committal of cases that do not merit the attention of the Crown court for the sole purpose of ensuring that the power in question is available. That would just clog up expensive state apparatus unnecessarily. On the other hand, if magistrates courts were prevented from using the procedure, and never became aware of its availability, people could elect to be tried in the magistrates court for relatively serious offences to avoid such an order.

If there really is a need for some procedure, and if the magistrates themselves think there is a need for such an order, my best suggestion is that there should be a power to commit after conviction. The Crown court could then be the agent which puts it in place. However, as the magistrates will start to be trained quite soon by the Judicial Studies Board, I would have thought that the board could lay down guidance and the magistrates could be trusted with it.

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

I am grateful to the hon. and learned Lady. I see some merit in the mechanism that she describes, although she then suggests that its apparatus might be too cumbersome to ensure that it would only be used sparingly and with good reason.   The last thing I want is to suggest that the magistracy is incapable of making appropriate decisions. We have to be wary of what is a substantial intrusion when added to the sentence already placed on the individual concerned. We need, and the court needs, to be assured that the severity of that additional penalty is appropriate to the offence committed and the offences that the court holds to be in danger of being committed later. That is what the Minister has to persuade us of.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General

I am sorry that I missed the start of the debate this morning. I am conscious that the probing amendments were, perhaps, the result of my perusing the amendment paper and putting them forward for consideration. I was particularly struck by a remark by the hon. Member for Hemel Hempstead.

The Minister may be able to help me, but I have always expected that an order of this kind would be made when someone was thought to be participating in a pattern of dishonest activities. Therefore it was, as much as anything else, intended as a control mechanism against future reoffending. If it is to be applied to a small, insignificant offender whom the prosecutor thinks may be part of a wider web of criminal and dishonest conduct, nothing is more likely to alert that person to having to make alternative financial arrangements than to be told in court that, every three months, he would have to produce his documents and report to somebody. That made me begin to wonder whether it was ever likely that a magistrates court case would come into this category.

People are going to make alternative arrangements. I thought that the measure was a way of suppressing nexus crime. Having arrested someone, knowing full well that they have a serious criminal lifestyle—heaven knows we debated this at great length in the Proceeds of Crime Bill—we would want to impose a sanction that their financial affairs would be closely scrutinised in future. I did not see it as a way of unearthing something down the line, since most people will make alternative arrangements when faced with such an order if they want to continue being dishonest. They will also try to conceal those arrangements from the investigators. Of course they may be caught, but they can certainly attempt it, which is why I took that view.

I am mindful of what the hon. and learned Member for Redcar (Vera Baird) said about not wanting to have too many committals to the Crown court. That is certainly a powerful argument, and it might be worth considering whether committal could only take place at the Crown court for the specific purpose of imposing such an order. That is likely to impose a greater burden on magistrates. I am sure it is one for which they could cater, but one is left with the slight anxiety that, because it is quite a complicated area, we may start getting orders made in cases which are not strictly necessary. We must face the fact that this is an onerous sanction.

In the past 24 hours, we have been reminded that criminals have rights. I do not disagree with that view, and we must ensure that whatever we do is proportionate.  

Photo of Caroline Flint Caroline Flint Parliamentary Under-Secretary (Home Office) 2:45 pm, 13th January 2005

One reason why we do not support the amendment, which would mean that financial reporting orders could not be applied at magistrates court level, is that some offenders, convicted by a magistrates court of one of the specified offences, will pose a higher risk of reoffending. For those people, an order would be appropriate. As we discussed, some of the specified offences, such as offences under the Theft Act 1978 and intellectual property offences, can be tried either way. There is no reason why a magistrates court should not have the power to impose those sentences.

I agree with my hon. and learned Friend the Member for Redcar that we do not want to create the ridiculous situation in which either the Crown court is clogged up with cases or people are choosing to be tried in a magistrates court and therefore finding another loophole in the proceedings. An offender convicted by a magistrates court of obtaining services by deception under section 1 of the Theft Act could pose a sufficient risk of reoffending for the court to believe that imposing a financial reporting order on him was justified.

It is a basic principle of sentencing that the sentence must be proportionate. I have listened to hon. Members, but magistrates courts and the Crown court are capable of exercising this responsibility. Magistrates courts, magistrates and those who work alongside them are considering different ways of deterring future offending, which in some cases involves containing people who are considered a risk to the community. That might involve securing drug treatment for people. There are many different creative, and hopefully effective, ways in which magistrates can think beyond simply imposing fines or custodial sentences when they deal with individual cases. We are confident that magistrates will not use the powers in cases in which they are inappropriate. In any case, the prosecutor will be the one who requests the financial reporting orders.

However, there are issues to be addressed, to which the hon. Member for Beaconsfield (Mr. Grieve) referred. We are trying to determine whether financial reporting orders can work on several different fronts. One would hope that they will act as a deterrent against future offending behaviour, although it is undeniable that people may on occasion be tempted back into offending and that mistakes will be made. However, these financial reports contain information that could be important.

As we discussed earlier, the reports may keep people from using legitimate financial institutions to organise their criminal activity. If they act as a deterrent, provide intelligence, disrupt criminal activity or keep criminal activity away from legal enterprises, they are no bad thing.

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

Having heard the Minister's answer, I am not entirely convinced that leaving things as they are will lead to the clause being either proportionate or administratively realistic. I know that doubts were expressed as to whether magistrates would commit on   the basis that they might not know about the availability of the orders, but I assume that the prosecution would have reminded the court at the time, so I cannot imagine them being forgotten about.

We do not, however, intend to take the matter further at the moment, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 69 ordered to stand part of the Bill.