Clause 11

Fraud Bill [Lords] – in a Public Bill Committee at 4:30 pm on 20th June 2006.

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Obtaining services dishonestly

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

I beg to move amendment No. 12, in clause 11, page 4, line 33, leave out ‘by a dishonest act’ and insert ‘dishonestly’.

Photo of Martyn Jones Martyn Jones Labour, Clwyd South

With this it will be convenient to discuss amendment No. 13, in clause 11, page 5, line 2, at end insert—

‘( ) A person shall not be guilty of an offence under this section if—

(a) the services obtained comprise only observing a performance, sporting or other event, and

(b) he is not within, nor has he sought to enter, the premises within which the performance or event are being held.'.

Photo of David Heath David Heath Shadow Leader of the House of Commons, Shadow Spokesperson (Cabinet Office) 4:45 pm, 20th June 2006

The amendments are quite separate, and I shall deal with them in turn.

Amendment No. 12 might sound like a very small distinction, but actually it has greater import than would first appear. First, stylistically, it brings the text of the clause in line with the clause title: “Obtaining services dishonestly”. That seems appropriate.

Secondly, however, there is a difference between a dishonest act and a person who performs an act dishonestly.  A dishonest act is, or could be, interpreted to be so at a later date, and the perpetrator may not be party to that interpretation. In other words, he may not have been behaving dishonestly but may have committed an act that, on consideration, is seen as dishonest. That puts the act at one remove from the intent.

The distinction is very narrow: in most cases, a person who commits a dishonest act will know perfectly well that they are doing so and will have been acting dishonestly. However, on a limited number of occasions, an act that could be interpreted as dishonest is committed by a person who believes that he is acting honestly. Using the adverb rather than the adjective would remove any possibility of ambiguity or legal argument on that nice distinction. There could be no distinction: if the person was obtaining services dishonestly, he would be doing so by a dishonest act, but would also know that he was doing so by a dishonest act because he was acting dishonestly.

Photo of Michael Fabricant Michael Fabricant Opposition Whip (Commons)

The hon. Gentleman is saying that the person should have mens rea—a guilty mind—and that there should be an intent to obtain services dishonestly. However, subsection (1) also says that the act should be in breach of subsection (2). Does that not also imply that he must have a guilty mind?

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

I do not think that it does. Subsection (2) lists a number of circumstances in which a person has obtained services, and I do not think that the two necessarily relate.

The amendment is narrow and I do not want to labour the point. However, simply using the adverb improves the clause and makes it say exactly what the Minister would want it to say. He may feel that the clause will be interpreted in that way in any case, in which case the amendment becomes unnecessary.

The second amendment in the group, No. 13, is a probing amendment to enable the Minister to say what I understood him to have said on Second Reading. It relates to a particular circumstance in which the service obtained is watching or taking in an event—a sports match or a performance perhaps—without paying. There are circumstances in which that would clearly be a fraudulent and dishonest act. A person who goes under a fence, knowing perfectly well that he has avoided going through the turnstile, is trying to obtain a service without paying. That is not in dispute.

However, there is a further and greyer area: when a person is watching a match because he has secured a vantage point from which he can see it, clearly with the intent of not paying, but nevertheless without potential detriment to the person who has put on the event. I can give an example of that from Bath.

I regularly watch Bath play rugby; the experience used to be good, although it is often unhappy nowadays. People can pay for seats at the Rec, the recreation ground in Bath. I received my season tickets just today and am now much less well off than I would otherwise have been. If a person happens to live in one of the houses on Great Pulteney street that overlook the ground, he can see the match for free. I do not think that in any circumstances a person could be deprived of  the right to look out of his window or stand on his balcony and watch the match for free. He is as entitled to look out of his property in that direction as any other. That is not the problem.

However, if one is clever, one can also go down one of the side turnings off Great Pulteney street, hoick oneself up to look over a wall and see the match equally free from a public thoroughfare. I do not believe that that should be a criminal offence. It is merely a happenstance. The simple fact that one can see the match from there does not mean that Bath rugby football club—or Bath Rugby plc—would be entitled to commence proceedings against someone who happened to be able to see the match from that vantage point outside the ground’s perimeter.

I hope that the Minister will make it absolutely clear in his response, so that I do not need to press the amendment, that in such circumstances an offence would not be committed, despite the fact that the person was not on their own property and was partaking of the event—the spectacle or match—without paying and with the intent of not paying, as they had no intention of going through a turnstile. Will he reassure me that just because they have not tried to secure entry to the ground, arena, theatre or whatever, they are not securing that service dishonestly and would not be liable to prosecution under the provision? If he can do so, it is not my intention to press the amendment.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General

I listened carefully to the hon. Gentleman. Although I understand what he is doing with the first amendment, I am not sure that I agree with him. I wait with interest to hear what the Solicitor-General will have to say, because it seems to me that the nature of the obtaining of a service requires a “dishonest act” to obtain it. Using that expression rather than the word “dishonestly” might well be a correct piece of drafting and does not in any way imply that dishonesty does not have to be proved. I shall wait to hear what the Solicitor-General has to say.

As regards the second amendment, again I shall wait with interest to hear what the Solicitor-General has to say, but as the service is the thing being obtained it strikes me that if someone is perching out of their window watching a cricket match that they are not paying for, they are not obtaining a service, which is the entry into the ground to watch the cricket or football match.

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

That is precisely the point. Is the service entry to the ground or watching the match, event, spectacle or whatever? I am not sure that we are as clear cut in that distinction as we would like to be.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General

And the hon. Gentleman was right to raise it. Applying some common sense to subsection (2), I think that the service must be the right to enter a particular area in order to watch the game. If in fact one can watch the game from somewhere where one does not have to pay for the service, that is tough on the service provider. I certainly do not think that the Government intend to criminalise people who look off their balconies, nor do I think that that the subsection does so. His argument is ingenious, but I do not think that it would carry much weight with the court.

Photo of Jeremy Wright Jeremy Wright Conservative, Rugby and Kenilworth

Does my hon. Friend agree that there might be another potential difficulty that perhaps the hon. Member for Somerton and Frome has not considered? One of the issues that the Government considered in relation to clause 11 was the problem of those who watch television through cable or other connections that are supplied through fraudulent means. The difficulty with the clause, if it were to be drafted as the hon. Gentleman wishes, would be that those who watch sporting performances on television might be caught by his redrafted clause. I am sure that he would not want that.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General

My hon. Friend raises an interesting point—perhaps another conundrum for the Solicitor-General to answer—and it seems to me that his argument has some force.

I shall wait to hear from the Solicitor-General, but on both matters I think that the hon. Member for Somerton and Frome, with whom I often agree, is for once probably worrying about nothing.

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

I shall begin with amendment No. 13, and reassure those who want to watch the rugby from Great Pulteney street that they should be able to continue to do so. Not only that, the crowds who sometimes watch the cricket from windows and rooftops around the Oval are not intended to be caught by the clause.

The test is the one in the Ghosh case in 1982 that I mentioned earlier. It is a two-stage test that is well known. The first part is whether the defendant’s behaviour would be regarded as dishonest by the ordinary standards of reasonable and honest people. If it would, the second part is whether the defendant was aware that his conduct was dishonest and would be regarded as such by reasonable and honest people. When we apply those tests, we can distinguish the sorts of circumstances that hon. Members are concerned about.

I reassure those who watch a game by luck and opportunity that they should not be in a position where reasonable and honest people would regard them as acting dishonestly. That test enables reassurance to be given in the particular circumstances that concern hon. Members with regard to amendment No. 13.

Amendment No. 12 would alter clause 11(1)(a), which requires that for the offence to be made out a “dishonest act” is required. The hon. Member for Beaconsfield has set out my case very well. Just to assist him in that, I shall quote the Law Commission’s 2002 report, which stated:

“It should not be possible to commit the offence by omission alone. This offence would not, for example, be committed by a person who innocently happened to be on a boat and, despite hearing an announcement that anyone who had not paid for the next trip should disembark, remained on the boat and thus received a free ride”.

The Government agree with the view that there should be an act and that it should be explicit that there is an act. We do not want to criminalise the obtaining of services by omission, as that risks leaving citizens too much at the mercy of unscrupulous service providers, who provide unrequested services, for example through the internet or by telephone.

While the dishonesty requirement should provide protection from prosecution for the innocent, we also wish to avoid a situation in which unscrupulous service providers might feel able to pressurise anyone who had obtained services that they had not requested. Indeed the formulation of clause 11 may discourage those service providers from making unwanted services available in the first place. In our consultations in 2004, clause 11 was widely welcomed and no problems were raised on this aspect of it. I hope that, given those reassurances, the hon. Gentleman will feel able to withdraw the amendment.

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

I am most grateful to the Solicitor-General. That was what I hoped to hear, and it will be of great reassurance to the hon. Member for Broxbourne (Mr. Walker), who raised the issue of watching sporting events on Second Reading. I am sure that he will be satisfied with the response, and on the basis of what the Solicitor-General has said, which is entirely what I expected him to say, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General

I beg to move amendment No. 6, in clause 11, page 5, line 7, leave out ‘5’ and insert ‘10’.

The amendment simply deals with the penalty for the offence. I am mindful of the fact that the existing penalty for the offence under the Theft Act is five years’ imprisonment and that that has been translated as a maximum into this new offence. My reason for tabling the amendment was simply to discuss whether, in the light of current circumstances, we might consider raising the maximum limit. We know that the obtaining of services by deception or dishonestly, as the new offence will be described, can run to many hundreds of thousands of pounds in some cases. Admittedly, it may sometimes be that the service provider is foolish, but there have been instances when the fraud has been of considerable scope. Some operate a system over time that deceives large numbers of people in a number of ways, and as a result they receive a multiplicity of services and can live a life of ease and luxury—until they are caught—but it is those who supply the services who are the losers, because those who received them are often unable to pay.

The question arises in my mind whether five years’ imprisonment in such circumstances will always be sufficient. That is particularly so given that we are living in an era when the perpetration of fraud of various sorts is so much more sophisticated. One could put another figure on it—perhaps seven years—but I ask the Committee to consider that, because five years is what appeared in the Theft Act 1968, it does not necessarily have to remain at five years.

As I reread the Theft Act prior to the Committee stage, I realised how deliciously dated certain aspects of it seem. Indeed, we touched on that when talking about going equipped to cheat; and obtaining of services by deception has the slight ring of a person coming along and, in rather a small way, obtaining some service and being unable to pay for it. The classic example is of a person going into a restaurant, ordering a meal and  then being unable to pay for it—and never having had the intention of doing so. We are not dealing with such problems here. In financial terms, they will often be substantial offences.

Against that, I am mindful that it may not be the only chargeable offence. In certain circumstances, especially if a great deal of money is involved, other fraud may be involved that could lead to a charge under clause 2. However, I would like the Solicitor-General to consider why we should make that distinction in such circumstances, and whether it is time to raise the maximum penalty. In the vast majority of cases, a penalty of more than five years imprisonment may not be required, but it would be a pity if prosecutors found themselves facing the fact that the easy and sensible offence to charge attracted a penalty that they considered insufficient to meet the gravity of the case.

Photo of Jeremy Wright Jeremy Wright Conservative, Rugby and Kenilworth 5:00 pm, 20th June 2006

I welcome you, Mr. Jones, to the Chair. I too should declare an interest—perhaps I should have done so earlier today—as a non-practising barrister, but not in such an illustrious capacity as my hon. Friend the Member for Torridge and West Devon (Mr. Cox).

I support the amendment. The Solicitor-General knows that I raised the matter on Second Reading, and it is worth the Committee considering it. As my hon. Friend the Member for Beaconsfield said, it would equalise the position between the fraudulent obtaining of services and the fraudulent obtaining of property or money. When we as legislators consider maximum sentences, we should consider two things. The first is the level of criminality and the second is the value of what has been obtained.

It seems perfectly conceivable that the level of ingenuity used by the criminal to fraudulently obtain the provision of services may be just as intricate and well developed as that needed to obtain property or money. I therefore see no logical reason for drawing a distinction in the maximum sentences.

The second question is the value of what has been obtained. As my hon. Friend the Member for Beaconsfield said, other parts of the Bill recognise the fact that the world has moved on, as has the British economy. For example, it recognises that it ought to be possible to commit an offence in which a machine is deceived, although that takes away the concept of deception; it recognises that today’s economy is different to that of 1968 or 1978. However, it should also recognise that the economy has moved on, in the sense that it is predominantly a service economy, or at least more so than ever it was.

We should not just examine professional and financial services, although they are valuable and if they are obtained by deception or fraudulently a service of great value could have been gained. We should also consider the worlds of sport and entertainment. The hon. Member for Somerton and Frome talked about what may be obtained by somebody who watches a sporting performance. How about what may be obtained by someone who gains the services of a footballer or pop star by some form of fraud? The value of such services could be very high indeed.

To take topical examples, if a small football club were fraudulently to obtain the services of David Beckham or Wayne Rooney, the value of those services—metatarsals allowing—would be extremely high, higher than if that club had by some form of fraud managed to obtain Wayne Rooney’s car or house. When we consider the situation in the modern British economy, which is substantially a service economy, it would be wrong not to accept that a criminal with the same degree of ingenuity as one carrying out another type of fraud, obtaining services of the same value, also merits a sentence of 10 years’ imprisonment.

Of course, not every example of obtaining services dishonestly would merit a sentence of 10 years, and it may be that my examples are somewhat extreme, but surely maximum sentences are designed to cater for extreme examples. The Committee should consider making sentences equal for criminal acts of equal value.

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

One is rather loth to enter the great debate about sentencing at the moment, given the extreme views that have been taken on all sides of the matter by various people in the past few days. However, we would all like to see a degree of consistency. I have argued for a long time personally and on behalf of my party that the basis on which sentences are made should be quite different and that there should be more openness and honesty about the intention of the sentencer. That is a commonly held view, and I do not know why it is not done.

Offences under clauses 1, 2, 3, 4, 7 and 9 carry a ten-year maximum sentence, whereas the offence under clause 6 and the one that we are currently considering under clause 11 carry a five-year maximum. The hon. Member for Rugby and Kenilworth (Jeremy Wright) was right to say that we should consider carefully the degree of criminality. If one were to take that to its absolute, one would have to say that there is no difference in the level of criminality of an offence under clause 6 from the other offences, only in the opportunity to put it into effect. There is a time difference between going equipped and committing an offence. A person may never actually commit the offence, which I presume is why it carries a lower penalty. We are satisfied that the five-year maximum is appropriate in clause 6.

On clause 11, I hear what the hon. Gentleman says about the value of services dishonestly obtained, but I have some difficulty in thinking of circumstances in which the clause would cover high-value services. The opportunity to ask Mr. Rooney to play for the local football team with the intent of not paying him at the end of his contract is unlikely and the idea that he would do so for very long is rather a far-fetched example and may involve other actionable offences such as breach of contract or misrepresentation. We need a degree of proportionality on the matter. I am open to the suggestion that a higher maximum sentence is required, but I would be much happier with it if I were satisfied that sentencing policy was in a fit state to accommodate maximum sentencing at different levels, that judges were given the proper discretion to do their job effectively and that there was a clarity and honesty in sentencing that is not there presently.

In general, some balance is appropriate between this Bill’s provisions and those dealing with analogous offences  under the Theft Act. To what degree has the Solicitor-General made that assessment? Is this simply a read-across, or has he formed the view that the offences set out in clause 11 are consonant with similar offences under the Theft Act and will carry the same and appropriate penalties? If that assessment has not been made, it should be made at the earliest opportunity.

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

We should begin by acknowledging that the hon. Member for Rugby and Kenilworth raised the matter with me on Second Reading, and I have considered it again. My reaction was to wonder whether, in order to get some parallel with offences relating to property and money, there was an argument for extending the measures. I thought about it with some care. There is always an argument for increasing sentences, but then I looked at the average sentence for obtaining services by deception, the parallel existing offence that the measures will replace. The average sentence handed down in 2004 was just over six months. In those circumstances, a penalty of five years and an unlimited fine rather than the average sentence appears adequate. We must consider what is proportionate in the circumstances.

The Law Commission considered the issue in its 2002 report on fraud. I did not explore it in great depth, but paragraph 8.16 says:

“On conviction on indictment, the maximum sentence available for the existing offence of obtaining services by deception is five years, and we see no reason why the maximum for the new offence should not be the same.”

We consulted on the matter, but received few responses. It might have been useful if the hon. Member for Rugby and Kenilworth, who originally raised the point, had suggested it at that time. I am sure that he was otherwise engaged winning his seat in Rugby.

If the average for even the most serious offences is just over six months’ imprisonment, a five-year maximum has the degree of proportionality that one seeks when trying to assess what the appropriate sentence ought to be. In view of the fact that those consultees who responded endorsed the five-year limit, that the Law Commission believes that it is right and that the average sentence for the existing offence appears to be just over six months, I believe that it is the right balance.

I shall not close my mind on the issue. If we feel at a later stage that the penalty is inadequate, we can reconsider it, but given how the courts are dealing with such offences, the measures will give judges enough flexibility to impose the maximum sentence in the most serious cases while preserving the average sentences for those that are indeed average.

Photo of Dominic Grieve Dominic Grieve Shadow Attorney General 5:15 pm, 20th June 2006

I listened carefully to what the Solicitor-General said. I would simply make one point to him, of which he may already be aware. The fact that the average sentence is of six months’ imprisonment comes as no surprise to me, but I am not sure that it is the central issue to the argument. On the whole, the sort of offence and the reasons why such offences tend to be charged is because they are of a rather low-grade kind. There are instances where, as I indicated in my opening remarks, substantial services of substantial value can be  obtained. It is in such instances that I raise the question as to whether five years is necessarily sufficient. Rather than looking at the average of the sentences passed for this type of offence, that would require looking at whether there were instances where judges had been imposing the maximum and may even in their sentencing remarks been making suggestions that the sentence does not entirely meet the gravity of the offence, as the Solicitor-General will be only too aware.

Because of the nature of the discount that a person attracts for pleading guilty, as an example, often in such cases—and my experience is that they often end in guilty pleas—that will already be substantially shortening any sentence that is going to be served, because it will start with five years as the maximum and then have to discount it against that. I respectfully suggest to the Solicitor-General that that is a more fertile area to look at than the average sentence passed. That said, and mindful and grateful that it will be looked at again, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 ordered to stand part of the Bill.