Clause 15

Fraud Bill [Lords] – in a Public Bill Committee at 5:30 pm on 20th June 2006.

Alert me about debates like this

Commencement and extent

Photo of David Heath David Heath Shadow Leader of the House of Commons, Shadow Spokesperson (Cabinet Office)

I beg to move amendment No. 16, in clause 15, page 6, line 11, at end insert—

‘( ) The Secretary of State may not appoint a day by order for section (Abolition of conspiracy to defraud) until he has received a report on the operation of this Act, and in any case not earlier than three years after the commencement of the Act.'.

Photo of Martyn Jones Martyn Jones Labour, Clwyd South

With this it will be convenient to discuss the following: New clause 2—Abolition of conspiracy to defraud—

‘(1) The common law offence of conspiracy to defraud is abolished for all purposes not relating to offences wholly or partly committed before the commencement of this Act.

(2) An offence is partly committed before the commencement of this Act if—

(a) a relevant event occurs before its commencement, and

(b) another relevant event occurs on or after its commencement.

(3) “Relevant event” in relation to an offence, means any act, omission or other event (including any result of one or more acts or omissions) proof of which is required for conviction of the offence.'.

New clause 9—Abolition of conspiracy to defraud—

‘The offence at common law of conspiracy to defraud shall be abolished and no further prosecution brought thereunder, upon the expiration of a period of five years from the day on which this Act is passed, unless there has been a resolution of both Houses of Parliament within the said period to a contrary effect.'.

Photo of David Heath David Heath Shadow Leader of the House of Commons, Shadow Spokesperson (Cabinet Office) 5:45 pm, 20th June 2006

We come now to the clauses on commencement. The amendments deal with the common law offence of conspiracy to defraud. We could have a long debate on the merits or otherwise of the offence, but that would not be a productive use of the Committee’s time because there is broad agreement on both sides that the common law offence should be abolished. That is the theoretical position of the Law Commission, which indicated that it was insupportable to retain the offence in law once the new statute was in place as a replacement. However, on Second Reading, the Minister said, quite properly, that although he wanted the common law offence to be abolished, he had to take note of the very strong reservations expressed in the consultation process, not only by the wider spectrum of consultees but specifically by parts of the judiciary, who together with some of the prosecuting authorities perceived the offence of conspiracy to defraud as being of value.

I slightly discount the opinions of prosecuting authorities, because it is always helpful to them to have the widest possible number of offences at their disposal to secure a conviction. For them to argue that they should have a wider spectrum, even in the context of new offences, is to some extent to be expected and is natural. However, it is not a position that we as a legislature should take if we are content that the full range of offences under the broad title of fraud is covered by the new law.

The offence of conspiracy to defraud has been widely criticised. As I said on Second Reading, one of my principal concerns about it is that, because it is a catch-all offence, it provides a very straightforward route by which the dual criminality requirements of an extradition application can be met. It is easy to establish that someone has, or could have, committed the offence in this country and that that person is therefore extraditable on a related fraud offence in another country. I instinctively feel that that is a dangerous position.

Despite having listened to the arguments on both sides and being firm in my conviction that the offence of conspiracy to defraud should be removed at the earliest opportunity, I accept the Minister’s comment that he would prefer a “suck it and see” approach in the short term, so that an assessment can be made of how the new offences bed down and of the pattern of prosecutions. He was kind enough to provide the draft guidance for prosecutors, which I think is extremely helpful.

We therefore have a choice. The first course of action open to us is to have a period of review in which the Solicitor-General or the Attorney-General carefully consider the prosecution patterns and whether there have been offences that have proved impossible to prosecute except under conspiracy to defraud, followed by introduction of new primary legislation to abolish the common law offence. Alternatively, at this stage and as a better process, we could incorporate into the  Bill a provision for abolition, with safeguards for the Minister in the form of a delay in commencement, as I have suggested, or a sunset clause for the offence, as suggested in the amendment tabled by the hon. Member for Beaconsfield. Either approach ends at almost precisely the same result. The hon. Gentleman’s approach has an automaticity that mine does not—mine simply allows for a delay in commencement of the relevant part of the Bill until such time as the Minister introduces an Order in Council. To some extent mine is a more Government-friendly amendment than the hon. Gentleman’s in that his forces their hand, whereas mine invites them to consider the point. The merit of both courses is that we would not have to start from square one with a new Bill or find another suitable vehicle for the repeal or abolition of the conspiracy to defraud offence. Either way, the spade work is done, the legislation is on the statute book and someone only has to press the button to make it happen.

Given that the Solicitor-General has made it clear that he would prefer to abolish the offence in due course, it is unquestionably better in procedural terms to deal with it in the Bill now, rather than revisit the matter later. However many Home Office and Department for Constitutional Affairs Bills we have to deal with month in, month out and year in, year out, hon. Members can bet their lives that someone will say that none of them are appropriate for the specific purpose and there will be a substantial delay, which is avoidable and unnecessary. I commend my amendment and the new clause to the Committee.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General

The hon. Member for Somerton and Frome is quite right: new clauses 2 and 9 set out different ways to achieve the same thing. I prefer my amendment, because the implication in the hon. Gentleman’s is that although the common law offence of conspiracy is abolished, that can be delayed to enable a review to take place. I drafted my amendment on the basis that we should have a five-year period to see how the new Act operates, after which it would be incumbent on the Government, if they decided to keep the common law conspiracy to defraud offence, to get a resolution of both Houses of Parliament to do so. I was trying to reflect the debate on Second Reading. I was persuaded by the Solicitor-General and by rereading the Bill that in the next five years we may conclude that, despite best efforts, the common law offence of conspiracy to defraud must be retained. I am open-minded about that. The arguments about why it would be desirable to get rid of the offence—if that is possible—have been well rehearsed.

The common law offence is wide and has some unintended consequences, the worst of which is the possibility of an individual being prosecuted for conspiracy to commit an offence which, if he had acted on his own, would not amount to a substantive offence at all. That has always been the greatest criticism levelled against it. However, having said that I also accept—after conversations with others who have had greater use of the conspiracy offence—that it is and may remain an important tool in bringing prosecutions that cannot be covered by the offences that we have identified.

I am open to persuasion. I should like the common law conspiracy offence to go, but that might not be possible. New clause 9 would enable that to happen in a  straightforward fashion. If there were unanimity that it should not go within five years, the Government would only have to introduce a resolution in both Houses of Parliament, on which we could vote pretty readily—it is a matter of half an afternoon’s business in both Houses—in which case we would have decided that it should remain. Knowing after nine years in the House how the place works, my worry is that if we do not do that or accept the proposal advanced by the hon. Gentleman, it will be difficult to find Government time even for a short Bill to get rid of the common law offence of conspiracy. I should add that it would be difficult whether the present Government or a Conservative Government were in office. That is the reality, so I do not want us to let this moment pass and lose the opportunity for what I think can be relatively short consideration, probably backed up by a report produced by the Government or a further report produced by the Law Commission on which Parliament can base a final decision, having had an opportunity to see how the Act works in practice.

I urge the Government to consider in a constructive light either my proposal or that of the hon. Member for Somerton and Frome, because it is difficult to see, particularly as regards new clause 9, any real downside for the Government in accepting it, or any downside in the operation of the courts system or the bringing of justice. It is a simple device that would ensure that, within the next five years, the matter would be reconsidered in a manner that did not take up too much of the House’s time, and we could make a final decision with the benefit of a more informed view of the operation of the legislation.

Photo of Jeremy Wright Jeremy Wright Conservative, Rugby and Kenilworth

It seems clear in the draft guidance that the Solicitor-General has helpfully allowed all of us on the Committee to see that the Government’s intention is, if they can, to persuade prosecutors not to use the common law offence, but to use instead the new statutory offences in the Bill. As has been said, there is a measure of agreement in the Committee that that is a wise thing for the Government to do. If that is the case, it would also be wise of the Government to make it as clear as possible to prosecutors that the Government’s intention is that the common law offence should, if possible, be phased out. Adopting new clause 9 would give the clearest possible signal in that regard and might help the Government to achieve what they are properly trying to achieve in the draft guidance. For that reason, I support the new clause.

Photo of Geoffrey Cox Geoffrey Cox Conservative, Torridge and West Devon

Not having been present for previous debates on the Bill, I am uncertain of the basis on which the Solicitor-General advanced the argument for continuing the conspiracy to defraud offence. I can understand the need to see how the clause unfolds—I was going to say “unravels”, but that would probably be an unfortunate way of putting it. I hope that it does not unravel. I can understand the need to see how the clause unfolds in practice in the courts. It is presumably possible to indict a defendant for conspiring to commit fraud under the Bill, so that one would have a charge of conspiracy to commit fraud with the particulars of the offence to be committed in one of the three ways set out in the Bill.

If the Government’s objective of drawing a wide offence of fraud is achieved, it is hard to see what is left for conspiracy to defraud. I know that the Solicitor-General is not necessarily saying that anything may be left; it is just a question of testing to see. I imagine that I am right about that, but if any specific instance or occasion of fraud were thought to be omitted potentially from the Bill, I would be interested in hearing about it in the Minister’s response. I, for my part, cannot see one and I am surprised by the Solicitor-General’s want of confidence in the Bill that he is presenting.

Fraud is a broadly defined offence and it seems to me that there will be little opportunity for indicting the common law conspiracy to defraud. Judges will, I suspect, want to hear a justification in the light of the Act—as the Bill will be—for why the common law conspiracy is being indicted. Once the Bill becomes law and has settled into the mind of the profession, I would be surprised to see any further conspiracies to defraud on indictment, because judges have historically wanted to understand what it is about a conspiracy to defraud—a common law conspiracy—that it is required on an indictment. Why not a substantive offence? Why not a conspiracy to commit a substantive offence? When the new offence exists, they will ask, “Why not conspiracy to commit these substantive offences, or this offence committable in a number of ways?” Many prosecutors will feel, before they put a conspiracy to defraud count on the indictment, that they will be forced to justify it in a preliminary hearing, or possibly a preparatory hearing. I suspect that they will be deterred by that prospect when the Bill is enacted and its provisions become available to them.

I wonder whether there will be many opportunities for the Government to watch how this measure is used. I hope that I have not perplexed the Solicitor-General; If I have not made my point clear, it is basically that if I were prosecuting, and I had this measure to indict fraud, whether it be on the basis of a conspiracy to commit it, or a substantive charge of fraud, I would expect the judge to be quite harsh to me if I chose to indict for a conspiracy to defraud. He would want to know why—what was the specific reason? What did I espy in the conspiracy to defraud that went wider than the charges of conspiracy to commit the other substantive offences?

I suspect, therefore, that there will not be much testing of the provision. I very much doubt whether many conspiracies to defraud will be seen on the indictment. I imagine that the Solicitor-General will respond, “Well, if that’s the case, then so be it—we’ll get rid of it,” but if, as I predict, it simply withers on the vine, would it not be better to interpolate into this Bill a provision for its termination, than to wait for all the process to be gone through, in years to come? It would have to be removed by a special Act of Parliament, or by some insertion in another Act reforming the criminal law; I would suggest the latter.

Photo of Mike O'Brien Mike O'Brien Solicitor General, Law Officers' Department 6:00 pm, 20th June 2006

I hoped not to have to go into why we need to retain conspiracy to defraud, because I thought that there was consensus on that, but for the benefit of the hon. Member for Torridge and West  Devon I shall explain why we need to retain it. There is broad consensus that we probably need to retain it for the time being, because there are circumstances in which it may need to be used. I have circulated a copy of the working draft of the Attorney-General’s guidance on the use of the common law offence of conspiracy to defraud and the circumstances in which it may continue to be used. I hope that the hon. Gentleman has it; we hope to be able to publish it when Royal Assent is given to this Bill. The aim of that guidance is to indicate the Attorney-General’s wish that we do not use conspiracy unless it is necessary to do so, but it accepts that there may well be circumstances in which it is necessary.

We wish to review the operation of conspiracy to defraud after three years. We want to see how this Bill, when it is law, affects the way in which prosecutions take place. We hope that it will cover most circumstances, although it will not cover them all, and that the courts and prosecutors can therefore examine the Bill and other legislation to see whether most of the mischiefs that we want to deal with can be dealt with otherwise than by conspiracy to defraud.

We all want that common law offence to be removed, and we hope that we will be able to do that in due course. We hope at the end of three years to be in a position to say that we will remove it. We all accept that we need to wait for that three-year period to end. My concern about the amendments is that they seem an untidy way of going about that removal. Having a sword of Damocles dangling over the legislation, or over the common law offence, would create a level of uncertainty among prosecutors about whether they ought to be charging it. Parliament will clearly have said that it should not be there, and there will be a time scale on it. Well, perhaps we do that with other offences, but in this circumstance we would be saying, over a period of five years—or, alternatively, a shorter period—that the intention is to get rid of it. The concern is that that would have a negative effect on our prosecutions from the moment of Royal Assent, as Parliament would have expressed its view that the offence should be abolished. There would then be uncertainty and possibly a little confusion among prosecutors about how very serious alleged offences and offenders should be investigated and charged, and whether they should be using the offence at all. Arguably, there would be the Attorney-General’s guidance to reassure them, but there would also be the will of Parliament suggesting that Parliament does not have a great deal of faith in this offence. That is an untidy and uncertain way of proceeding.

I do not think that there is any great difference in view, at least among Front Bench Members, on what ought to be done. In terms of how things should be done, I think that there is a fear that perhaps the Government will not get round to doing them. I have noticed—the Opposition have made quite a point of saying this—that there has not been a dearth of criminal justice Acts in recent years. I suspect that in the coming years there will not be a dearth of such Acts either, and that will enable conspiracy to defraud to be dealt with.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General

My heart sinks. The last thing that I want to do is to encourage another criminal justice Act  in any circumstances. Swords of Damocles concentrate minds wonderfully. The one thing that I have learned in politics in the past nine years is that most of the problems that we experience are due to inertia. Anything that shifts inertia is worth having.

I find it difficult to accept that introducing my sunset clause will suddenly mean that the existing law becomes unusable. I find that a poor argument. There are sunset clauses for all sorts of other things that we have done—or that we do—in this Parliament. They do not mean that the legislation becomes unusable as a result.

Photo of Mike O'Brien Mike O'Brien Solicitor General, Law Officers' Department

Not so much unusable, because that is not what I have argued. I have argued that such a provision would produce uncertainty. It is untidy and uncertain, and that uncertainty would lead to some prosecutors feeling that they should not charge under conspiracy to defraud. That might well mean that the full range of the culpability of a particular defendant might not be covered, even though our intention is that it should be.

We are saying, “Prosecutors, you need to continue to use this in particular circumstances”—we shall discuss those in a moment—“but we do not think it is a good piece of law and we intend to abolish it in due course.” Sunset clauses have been used on occasion, but they are not the best way of proceeding. They have some faults, particularly when we are dealing with a common law offence that is based on case law and the development of the law over a long period. There is an understanding of it and the way in which it should be used. That understanding would be complicated by a sunset clause that says, “This isn’t very good at all. You ought not to use it—or you should not use it very much—except when the Attorney-General says perhaps you should.” It is probably workable to do what the hon. Gentleman says; it is just that it is not the best way of proceeding. This is matter of judgment. Such a provision would be untidy and would lead to a degree of uncertainty that we do not need.

I do not think that we will be in a position where we are unable to remove the provision in three years’ time, because a Bill will doubtless be present then, or shortly thereafter, to allow a Government to deal with a conspiracy to defraud—a common law offence—and to remove it from the statute book if that is the desirable approach.

Photo of Jeremy Wright Jeremy Wright Conservative, Rugby and Kenilworth

I would entirely follow the line of argument that the Solicitor-General is taking if it were not for the fact that the Government, by the draft guidance, are clearly trying to influence the behaviour of prosecutors. He cannot have it both ways. He cannot argue that the problem with new clause 9 is that it would deter prosecutors from doing what they were otherwise going to do when the draft guidance has precisely that effect. Surely it must be right that if over the next three or five years prosecutors, despite the draft guidance, say that conspiracy to defraud is the appropriate charge in a large number of sets of circumstances, under the proposed procedure set out in new clause 9 both Houses of Parliament would understand that and doubtless conclude that conspiracy to defraud, as a common law offence, should remain.

Photo of Mike O'Brien Mike O'Brien Solicitor General, Law Officers' Department

The approach that prosecutors will actually take is set out in the draft guidance. Paragraph 6 reads:

“In selecting charges in fraud cases, the prosecutor should first consider”— which we have—a couple of tests:

“whether the behaviour could be prosecuted under statute—whether under the Fraud Act 2006 or another Act or as a statutory conspiracy;” and, further,

“whether the available statutory charges adequately reflect the gravity of the offence.”

Those tests need to be passed, but we are not deterring a prosecutor from using conspiracy to defraud where that is the most appropriate approach. We are saying that if one is considering that, look at the tests set out by the Attorney-General and then make a decision about whether one should proceed by way of conspiracy to defraud. In many cases, I suspect that a prosecutor will decide that that is the appropriate way to proceed. Then we will be able to consider the outcome of those cases and take a view in three years’ time as to whether it is appropriate to decide to remove conspiracy to defraud, not just because of the Bill but because other pieces of legislation and other views about how legislation should develop will have come to pass.

I will deal with the point of the hon. Member for Torridge and West Devon because that will enable me to elaborate what else will take place. We have a number of things moving forward by way of consideration of how legislation should develop that may well have an impact. The Fraud Bill—or the Fraud Act, as in due course I hope it will become—is not the whole answer to the issue of conspiracy to defraud in the common law offence. Even when the Bill receives Royal Assent there will be examples of dishonest conduct that it will not be possible to prosecute under statute; for example, where it is intended that the final offence be committed by someone outside the conspiracy. So, a group of people has conspired in order to defraud, but the final act is committed outside the conspiracy. Secondly, there will be cases where it cannot be proved that the accused had the necessary degree of knowledge of the substantive offence, so the degree of knowledge is an issue there. Moreover, as Lord Rose’s Committee—which took a very strong line on support for conspiracy to defraud remaining as an option for prosecutors—emphasised, conspiracy to defraud is a vital tool in prosecuting cases with multiple defendants and multiple frauds.

Therefore, vital as the Bill is, other pieces of the jigsaw have to fall into place before the offence can be safely repealed. In addressing the issue of multiple offences, we need time to gauge the effect of the Lord Chief Justice’s protocol on the control and management of heavy fraud cases and the sample count provisions in the Domestic Violence, Crime and Victims Act 2004 that we hope to implement later this year.

In ensuring that the law fully covers forms of participation in crime that do not amount to statutory conspiracy, we need to consider a new law on assisting and encouraging crime in the light of the Law Commission’s study of that issue, which we hope will be published shortly. That again may lead to new law, which may affect the way in which conspiracy to defraud is able to be removed.

The Government’s review, which is expected in three years’ time, will thus need to consider the situation not only in the light of the practical operation of the new fraud offences, but other relevant changes including any that may flow from the ongoing review of fraud. We hope that that fraud review will be published shortly. I cannot give a precise date at the moment, but I am aware that the conclusions are nearing fruition. That, too, might have an impact.

If the conclusion of the 2009 review is that the offence should be abolished, that would be achieved with proper safeguards after a time in which the Government and Parliament have been given a proper opportunity to consider the matter, including whether any alternative provisions are required. To suspend the sword of Damocles over the whole proceedings would not be the best approach. It would lead to an element of confusion. I hope that the Committee will not consider that an appropriate way to proceed. It is important to remember that one possible, indeed likely, scenario is that we will not just repeal conspiracy to defraud but simultaneously make other changes on statutory conspiracy or criminal procedure. We do not know what those changes might be, because they have not yet been recommended by the appropriate committees, but we may well have to examine a different way of covering parts of conspiracy to defraud in a more satisfactory way that will require different legislative changes. The amendments would not allow for that; they would mean simply that the offence was going. That could create a level of difficulty in developing future legislation that we really do not need.

The Government have made it clear that they are committed to repealing conspiracy to defraud at some stage. We have said that

“it remains our long-term aim to repeal this common law crime and we will review the position” in due course. We need to be sure that all the pieces of the jigsaw are in place before we make the decision to repeal, and it would be inappropriate to do so now.

Photo of David Heath David Heath Shadow Leader of the House of Commons, Shadow Spokesperson (Cabinet Office) 6:15 pm, 20th June 2006

That was an interesting little debate. One must assume that prosecutors will not listen to the Solicitor-General when he says that the Government’s clear intention is to repeal the law, because if they did they might become confused as to whether they are to use the conspiracy to defraud provisions. As an aside, I think that Damocles and Canute dealt wisely with people who got the wrong end of the stick. In the case of Damocles, the concentration of the mind was greatly enhanced by the provision of his simple memento mori.

I take seriously what the Solicitor-General says on the matter, and he rightly says that there are not great differences in the Committee on what we want to see. I welcome the guidance, which carries a clear intimation that the conspiracy common-law offence is no longer the preferred route for prosecutions. I part with him on his view that it will be the lot of a future Government to repeal the provision. In my experience, Governments are not very good at repealing laws or removing offences. They are very good at creating new offences and laws, which is why we have criminal justice Bills  coming one after another like buses in the high street, but we do not often have Bills that repeal existing offences or laws. That is one of the difficulties of our system: it has a ratchet effect. We constantly accrete new laws but we do not remove the old ones, thus ending up with more confusion and a less comprehensible legal system.

There was a great deal of merit in what the hon. Member for Beaconsfield said about a sunset clause, but I understand why the Minister might be nervous about that. To an extent it would take the matter out of his control, meaning that he or his successor would have to take action to prevent the law from being repealed. I concede that there is a possibility that that might affect the view of prosecutors, as we approach the time of the expiry of the offence, as to whether it is a proper offence to prosecute. I do not think that that can possibly be true of the commencement clause that I have suggested as an alternative device. It is common for Government to put provisions in Bills and then not to commence with them when the Bill comes into force. One of the reasons why we have difficulties with conspiracy to defraud is the problem of multiple counts, which we dealt with in a provision in the Domestic Violence, Crime and Victims Act 2004 that the Government have not yet brought into force because it has a delayed commencement.

This is a perfectly normal way of dealing with things as far as this and other Governments are concerned. Therefore, it is within the gift of future Ministers never to commence this part of the Bill if the evidence is that the conspiracy to defraud offence is still required to prosecute certain cases. I do not accept that it shows any lack of clarity or decisiveness on the part of the Government simply to provide the means by which a future Government can take a decision without having to start from scratch with primary legislation. I hope that my new clause 2 passes the drafting test, as it is lifted directly from the original recommendations of the Law Commission, which is pretty good at drafting such things.

I still believe that the Government would be much better advised to include the provision now and then to make a decision in three, four or five years’ time—at any time, in fact, as there is no time limit. My new clause requires only that commencement should not be within three years in order to accommodate the Solicitor-General’s reservations, but it does not require him to take action at any stage unless he or his successors are satisfied that the law is working properly. The new clause would mean that we would not have to start with new primary legislation.

In conclusion, I remind the Committee what the Law Commission had to say about conspiracy to defraud. It stated:

“On any view, the present position is anomalous and has no place in a coherent criminal law.”

It could not have been more damning of the use of this offence. The purpose of the Bill is to replace it, and replace it it does. Reservations are still expressed partly because we have not implemented the multiple count provisions and partly because nobody is absolutely sure that circumstances would not arise in which conspiracy to defraud or something similar might be required. In three or four years’ time, we will know that. We will know whether there are any circumstances in which it makes sense to retain a common law offence of this sort. My suspicion is that there will not have been any such circumstances, and my provision would make it easy for the Government then to take a decision without wasting parliamentary time. I am still hopeful that the Minister will reconsider that between now and Report.

If the hon. Member for Torridge and West Devon is not planning to intervene on me at this stage, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 15 ordered to stand part of the Bill.

Clause 16 ordered to stand part of the Bill.

Further consideration adjourned.—[Mr. Campbell.]

Adjourned accordingly at twenty-three minutes past Six o’clock till Thursday 22 June at Nine o’clock.