Clause 68

Serious Crime Bill [Lords] – in a Public Bill Committee at 2:46 pm on 5 July 2007.

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Abolition of Assets Recovery Agency and redistribution of functions etc.

Photo of James Brokenshire James Brokenshire Shadow Minister (Home Affairs)

I beg to move amendment No. 199, in clause 68, page 37, line 41, at end insert—

‘(3A) The Serious Organised Crime and Police Act 2005 (c. 15) is amended as follows.

(3B) After section 7(6), insert—

“(6A) It shall be the duty of the Secretary of State to make a motion in the House of Commons in respect of the annual report laid under subsection (6) within three months of the date on which the report was laid.”

(3C) After section 7(7), insert—

“(7A) It shall be the duty of Scottish Ministers to make a motion in the Scottish Parliament in respect of the annual report laid under subsection (7) within three months of the date on which the report was laid.”’.

I turn now to a very different issue: the scrutiny of the Serious Organised Crime Agency in its enlarged and expanded form. The Bill would transfer the assets recovery  functions of the Assets Recovery Agency to SOCA—an issue that I shall address during the stand part debate. SOCA was created just over a year ago, and drew together the National Crime Squad, the National Criminal Intelligence Service, the National High Tech Crime Unit and parts of Her Majesty’s Revenue and Customs, as well as parts of the immigration service. Its budget for the current financial year is £399 million of resource funding, plus £43 million of capital funding. Its status is that of an executive non-departmental public body, sponsored by, but operationally independent of, the Home Office.

It is understandable that the sensitive and intelligence-led nature of SOCA’s work makes it unable to provide complete information to the public on its operations. However, that does not mean that its effectiveness should not be subject to regular examination, scrutiny and oversight. The Opposition believe that the amendment would provide an important mechanism for Parliament to apply such scrutiny and would ensure that there would be a clear, direct and annual mechanism under which SOCA and its annual performance would be held to account, reviewed and debated by the House.

SOCA is an essential part of the structures that exist to address the continued threat to the country and to our constituents from serious organised crime. The importance of its work should not be understated, but in many ways that underlines the need for appropriate mechanisms of scrutiny. SOCA’s remit is harm reduction, which is a very broad concept that is difficult to measure and assess. It is all the more important, therefore, to enable Parliament to examine that role and function and to hold SOCA to account.

The concern about the checks and balances on SOCA’s operations has been brought into stark focus by recent comments from the Court of Appeal. In the case of UMBS Online Limited v. Serious Organised Crime Agency, the Court of Appeal held that SOCA had acted unlawfully in freezing payments to a company suspected of VAT fraud. Whatever the merits of that case, the reported comments of the Lords Justices of Appeal are potentially disturbing. They said:

“A feature of the way SOCA operates is that it does not condescend to detail either in the reasoning for its decision or in disclosing the facts upon which it relies in coming to that decision. This is not a very satisfactory position.”

Lord Justice Sedley added:

“In setting up the Serious Organised Crime Agency, the state has set out to create an Alsatia—a region of executive action free of judicial oversight.”

Those seem to be quite strong words from learned judges, and they are made even starker by the fact that Parliament itself does not have any direct oversight over the working of SOCA either. If such serious comments are being made about the operation of SOCA, that should give us cause to stop and think.

We also need to test and question SOCA on the performance information that it does provide. For example, questions have been raised about the robustness of information provided by the agency on the level of its drug seizures. Such seizures are an essential element of SOCA’s role and performance and  the Conservatives welcomed the information about the volume of drugs seized when it was revealed in SOCA’s annual report. However, SOCA has refused to substantiate those figures, saying that it was not prepared to provide specific details of its ongoing work and that previous protocols for assessing drug seizures did not apply to it because it is a new and different organisation and that

“our reporting is, in consequence, different too.”

Frankly, that is not acceptable, particularly when we are considering extending the scope, responsibility and ambit of the work undertaken by SOCA. Of course, there may be, quite rightly, operational matters that need to be kept secret and certain areas of SOCA’s work do not need to be put into the public domain, because of their sensitive nature and the need to protect the public. However, I do not think that that necessarily means that there should not be some form of direct scrutiny of SOCA’s reports and the way that it operates.

In evidence to the Public Accounts Committee on 7 March 2007 about the transfer of the assets recovery functions to SOCA, Sir John Bourn, the Comptroller and Auditor General, was asked whether SOCA would have the financial systems in place to assess whether the costs of those functions were greater than or less than the assets that it had recovered. Sir John said:

“It should have a proper system of management accounts which will provide that information and we shall see that it does have.”

Can the Minister indicate whether other measures are currently being undertaken or will be undertaken of the other functions of SOCA, so that the reporting of those other aspects of its work can be assessed in the same way as the Comptroller and Auditor General proposed that its assets recovery functions will be assessed?

As SOCA has been in operation for just over a year, it would be premature to pass any comments on its effectiveness. There are positive indications in terms of improved international co-operation and drug seizures. On the downside, SOCA has prosecuted fewer cases in the UK courts than its predecessor and missed targets on seizing criminal assets. There have also been criticisms of its bureaucracy.

It is vital that SOCA learns the right lessons during this early period and develops its operational capacity to disrupt and put behind bars those involved in serious organised crime, but in doing so it must also withstand scrutiny and examination. We believe that the mechanism of providing for a motion to be laid both in Parliament and in the Scottish Parliament within three months of the laying of SOCA’s annual report would be an important means of offering that oversight. We believe that such a mechanism would also help to strengthen the position of SOCA in its essential fight against those who wish to harm the interests of this country and damage the lives of our constituents.

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

I rise to support my hon. Friend’s amendment. We are here creating an agency with immense powers; even Government Members must acknowledge that. Part of the debate in this Committee over the last few days and weeks has been about  whether or not those vast powers that are being entrusted to this agency are right, or whether they are unprecedented and unwise. However, on any view, the Ministers have not disguised the fact that we are talking about large powers.

It is an astonishing thing when a High Court judge should say what was said in the case of UMBS Online Limited v. Serious Organised Crime Agency, the case that my hon. Friend referred to. It means that there is grave reservation throughout the judiciary about the levels of accountability of SOCA. I say to the Minister that, if it is true that the current Government are inclined to extend the functions of this House in the monitoring and supervision of democracy in this country, that democratic accountability ought to extend to such agencies, which are entrusted and empowered to take away the liberties of individual citizens, on the balance of probabilities and on affidavit evidence without trial. The mechanism proposed by my hon. Friend is reasonable, measured and subject to all the safeguards of this House to ensure that only proper decisions are taken. I urge the Minister and other Government Members to think seriously about it.

Photo of Vernon Coaker Vernon Coaker Parliamentary Under-Secretary (Home Office) (Crime Reduction) 3:00, 5 July 2007

I thank the hon. Member for Hornchurch for his warm remarks about the creation of SOCA and the important work that it does, notwithstanding the points about accountability that he went on to make. It is important that we all place on the record our belief that SOCA is a vital part of our law enforcement, which has made an impact on the tackling of serious and organised crime. It is making a significant difference. I appreciated the hon. Gentleman’s remarks.

Amendment No. 199 would prompt debates in the UK and Scottish Parliaments on the Serious Organised Crime Agency’s annual reports. In principle, I have no difficulty with the idea of such a debate in the UK Parliament, and it is always open to Members of this House to initiate one. I question whether that approach would be proportionate as a matter of annual routine, however. The accountability that the hon. Gentleman seeks is already secured by less heavy means. As he said, SOCA is an Executive non-departmental public body that is funded principally by the Home Office and is accordingly accountable to the Home Secretary in Parliament. The mechanisms to ensure that accountability are set out in existing legislation that was agreed only two years ago.

Parliament is already in a position to raise questions about the work of SOCA—it frequently does so, as I know from answering them—through Home Office Ministers, whether in relation to its annual reports or not. Other parliamentary mechanisms are available too, such as the Home Affairs Committee, which can conduct inquiries. For the Committee’s information, I should like to point out that the chair and the director general of SOCA met the Chairman of the Home Affairs Committee last month. They discussed the possible scrutiny by that Committee of SOCA’s work this autumn. The chair and the director general of SOCA were keen for such an inquiry to take place and keen to give evidence to the Committee. The current reporting arrangements for SOCA are broadly in line with those for similar organisations. I do not believe  that the imposition of additional requirements that single out the agency for special treatment is justified.

The chairman and the director general of SOCA are happy to appear before other parliamentary Committees and have done so. In the early days of the agency, they had an introductory meeting with MPs. They have offered to come to speak to members of this Committee about SOCA’s work, serious crime prevention orders and other matters. They will do so before Report, should hon. Members wish to attend. The Government believe that the current arrangements for scrutinising SOCA’s work are adequate. The amendment would go beyond what is required.

We have discussed the second limb of the amendment with our colleagues in the Scottish Executive. They also believe that it would impose a requirement that goes further than necessary and further than the equivalent arrangements for similar organisations in Scotland, such as the Scottish Crime and Drug Enforcement Agency.

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

Does not the Minister recognise that a Lord Justice of Appeal has said in court that the agency is an accountability-free zone, and that there are real problems with the way in which it will be scrutinised? The mechanisms that the Minister is talking about are not adequate for the task of scrutiny. That is one of the reasons why the Government are proposing new solutions to bring about the better scrutiny of state institutions. Surely the hon. Gentleman must recognise the pronouncements of the Court of Appeal.

Photo of Vernon Coaker Vernon Coaker Parliamentary Under-Secretary (Home Office) (Crime Reduction)

I recognise what the hon. Gentleman is saying. I would not wish to decry in any sense the importance of what any member of the judiciary or others say about SOCA. The only point that I am making is that it is open for any Member of Parliament to ask questions about it; it is open for there to be Adjournment debates and it is open for all sorts of parliamentary scrutiny to take place. I say to him and the hon. Member for Hornchurch that I believe parliamentary scrutiny of SOCA is available. It has shown itself willing to discuss matters with parliamentary Committees and Members of Parliament and as such I see the amendment as unnecessary.

Photo of James Brokenshire James Brokenshire Shadow Minister (Home Affairs)

I am somewhat underwhelmed by the Minister’s response to the amendment. It is a serious issue in respect of the assessment and scrutiny of SOCA, and public and more general assurances about its work. In no way do I undermine SOCA’s willingness to discuss matters with members of the Committee or to make itself available to any subsequent inquiry that the Home Affairs Committee may undertake. I have no reasons to doubt the bona fides of its officers. Indeed, a lot of them are working hard to ensure that the best interests of the country are protected. However, that does not mean that there should not be robust mechanisms for scrutiny.

I hear what the Minister has said about what may be available, but given the importance of the organisation and the increase in its role as a consequence of the Bill, it is appropriate to stop, consider and reflect—notwithstanding the fact that the House may have  established SOCA and applied the relevant mechanisms for the provision of reports two years ago. Given the changing role and a time of reflection, it does not mean necessarily that we should not re-examine matters, particularly when some surprisingly strident quotes about judicial oversight have come from some quite senior judges.

At the time when the Prime Minister is saying that he would like to see greater openness of Government, we should be strengthening the role of Parliament in its examination and scrutiny of the Government. The provision would be a good indication of that intent and would also strengthen and improve the operations of SOCA. I am disappointed that the Minister is not willing to give some ground in relation to that and, on that basis, I wish to test the Committee’s opinion on the amendment.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 8.

Division number 23 Nimrod Review — Statement — Clause 68

Aye: 5 MPs

No: 8 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly negatived.

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

Photo of James Brokenshire James Brokenshire Shadow Minister (Home Affairs)

We now move on to the broader issues arising from the clause and what is effectively the final death-knell for the Assets Recovery Agency. The Chairman of the Public Accounts Committee recently highlighted the weaknesses of the agency when he said:

“To sum up, you have spent £65 million and you have recovered £23 million. You have no complete record of the cases referred to you. You have worked on over 700 cases and managed to recover assets in a mere 52, 90% of financial investigators you have trained have not completed the courses that they need to.”

That may be a very harsh judgment, but the Assets Recovery Agency has not lived up to expectations, and it has fallen short of what was required of it. That is why, on 11 January, the Government were forced to announce the transfer of its functions to SOCA and the National Policing Improvement Agency, which this Bill is intended to give effect to.

The question that remains—I think it important to discuss this in the context of this clause—is whether the successor bodies will do a better job. We sincerely hope that they do because that is in the best interests of this country, but it is important that the lessons of the past are not overlooked.

Photo of Chris Ruane Chris Ruane Labour, Vale of Clwyd

The hon. Gentleman poses the question, “Will they do a better  job?” I can onfirm that they are already doing a better job. In my constituency, the North Wales police, in conjunction with the agency, took £7 million from one criminal alone.

Photo of James Brokenshire James Brokenshire Shadow Minister (Home Affairs)

I am obviously delighted to hear of that particular example because it is important that we recover assets from criminals and deprive them of their ill-gotten gains. I welcome the hon. Gentleman’s intervention because it highlights the importance of assets recovery work. Obviously, we are discussing the transfer of ARA’s current functions to SOCA and the National Policing Improvement Agency. In that context, there will be a transfer of powers, which is outlined in the Bill.

I would like to flag up the concerns that were expressed about the ARA in a National Audit Office report. The report was critical notwithstanding the individual successes that the hon. Gentleman has highlighted. The NAO pointed out that despite the agency’s best efforts to encourage bodies to refer cases to it, four police forces and most local authorities and trading standards offices had yet to refer a case to it.

A number of criticisms were levelled at the agency, including poor case management information, high staff turnover and the fact that the staff did not record their time so that the agency could not measure the resources deployed on each case.

It is important that we learn from the criticisms rightly identified by the National Audit Office and that the Minister can give us some assurance that they have been considered and will be addressed when the successor bodies take over the roles and functions. It is also important to know what undertakings the NAO recommended for the future. The NAO said that its recommendations equally applied to the successor bodies because by the time its report came out, it was recognised that the ARA’s roles and duties were being transferred.

Photo of Chris Ruane Chris Ruane Labour, Vale of Clwyd

The hon. Gentleman has picked out aspects of the NAO report that highlight the negative aspects of the agency. Were there any positive aspects?

Photo of James Brokenshire James Brokenshire Shadow Minister (Home Affairs) 3:15, 5 July 2007

It is a fair point to make and I am very happy to provide a copy of the NAO report. I am not seeking to portray the report too negatively in terms of its balance. Some serious criticisms were levied, but as I said, I am not denigrating the individual successes achieved for the hon. Gentleman’s constituents and mine. My point in terms of analysing an organisation in its entirety is that the criticisms in the report, which are on the public record, were made to ensure that we can improve—that when we transfer the rights, duties and responsibilities, the new agencies will learn constructively from the criticisms. That will ensure that we can strengthen our fight against organised criminals and disrupt their activity by seeking to reclaim assets from them.

The NAO report made some specific recommendations. Can the Minister confirm either that the Assets Recovery Agency has acted on those recommendations or that steps are being taken to ensure that the successor bodies to whom its responsibilities and activities will be transferred  pursuant to the Bill will act on them, and that plans will be implemented to address the structural and other issues highlighted by the NAO to ensure that lessons are learned and previous weaknesses are addressed?

Photo of Jeremy Wright Jeremy Wright Opposition Whip (Commons)

I rise to support my hon. Friend’s comments and to raise another matter, which I mentioned on Second Reading in an intervention on the Minister’s colleague. Notwithstanding the points made by the hon. Member for Vale of Clwyd, it is clear that the Assets Recovery Agency has not been as successful as we all agree it should have been. One of the reasons is that the agency’s applications in court for recovery of funds have been delayed, causing the precedents necessary to allow it to recover money more regularly and swiftly not to be set on the face of the law reports.

The delay is due at least in part—I say this with some concern, given the presence of my right hon. and learned Friend the Member for Sleaford and North Hykeham and my hon. and learned Friend the Member for Torridge and West Devon; I declare an interest myself as a non-practising member of the Bar—to lawyers’ use of the Human Rights Act to delay the processes so that the Assets Recovery Agency is not as efficient as it should be.

Nothing that I can see in the transferral of responsibilities from the Assets Recovery Agency to SOCA will address any of those problems that seem to be at the root of the Assets Recovery Agency’s failure. I accept that you would not wish us to stray beyond the confines of the Bill, Mr. Benton, but can the Minister discuss any of the wider causes for the inadequate results of the Assets Recovery Agency and whether the Bill is likely to address them?

Photo of Vernon Coaker Vernon Coaker Parliamentary Under-Secretary (Home Office) (Crime Reduction)

Let me say at the beginning of this clause stand part debate that improving asset recovery through the civil route—I shall not stray, Mr. Benton, into the Proceeds of Crime Act 2002, the criminal route and confiscation orders—is crucial work for all of us. That so many criminals are seen to gain from their activity, in such a way that people are amazed that we cannot do more to take away their ill-gotten gains, is something that unites us all.

Nothing undermines our communities more than some young person seeing people who are obviously living beyond their means flaunting their wealth. Whether improvements are made through the Proceeds of Crime Act 2002—the criminal route—or through the civil route, we simply must do better. We must show people that getting up in the morning, working hard at school, getting qualifications and then going to work, with the values that we all appreciate and want for ourselves, our communities and our children, should be seen to be at the forefront of what we want to achieve. I know that there is no disagreement in the Committee on that, but it is important to assert the fact.

Photo of Chris Ruane Chris Ruane Labour, Vale of Clwyd

I support my hon. Friend in what he says about the impact of catching criminals and taking the money from them. The impact in the community will be tremendous. Does he think that there would be merit in the police being allowed to keep a larger proportion of the money that is confiscated and ring-fencing it for anti-crime measures, whether for  closed circuit television, or anti-graffiti or antisocial behaviour measures within the community itself, in order to show not only that crime does not pay but that the community can benefit?

Photo of Joe Benton Joe Benton Labour, Bootle

Order. That has little to do with clause 68.

Photo of Vernon Coaker Vernon Coaker Parliamentary Under-Secretary (Home Office) (Crime Reduction)

It was an interesting point. As always, we carefully consider all such matters.

After those introductory remarks, Mr. Benton—I appreciate your allowing me to make them—I turn to some specific points. In answer to the hon. Member for Rugby and Kenilworth, there have been problems with the judicial process. However, the Assets Recovery Agency has been successful; Jane Earl and or Alan McQuillan say that their work has changed the way in which the judicial and the legislative processes operate. There have been problems and hold-ups, but to a certain extent the agency has been trailblazing a route that others should be able to follow.

The hon. Member for Hornchurch asked about the National Audit Office report. The director of the Assets Recovery Agency is actively addressing the management issues identified in that report—the hon. Gentleman wanted reassurance on that point—and he agrees that UK-wide management was needed. A new system is already in place for case management, but he recognises that it needs to be improved. The agency is also developing a formal management review of cases that will include a timetable for each stage; it will also hold people to account. That answer may deal also with the point raised by the hon. Member for Rugby and Kenilworth. Management systems will be tightened up.

My hon. Friend the Member for Vale of Clwyd made an important point when he intervened on the hon. Member for Hornchurch. He asked whether positives were to be found in the NAO report as well as negatives. I accept that there are negatives, but the Assets Recovery Agency is dealing with them. My hon. Friend will be interested to hear that the NAO report highlighted a number of positives. The agency has established important case law in respect of human rights. Again, that goes to the heart of the question put by the hon. Member for Rugby and Kenilworth; the agency has trailblazed a route through the problems, and we hope that others can follow.

The agency has been successful in freezing assets and issuing tax assessments. As for enforcement, more than 90 per cent. of awards have been successfully recovered. The agency is also delivering training courses and has received positive feedback from those who have attended. As well as having had difficulties, the Assets Recovery Agency has had some positive results. My hon. Friend made an excellent point when asking about that.

Asset recovery is a vital weapon in tackling serious and organised crime, as such crime is driven by profit. Removing the profit is an effective lever in making communities safer. The Assets Recovery Agency is successfully taking forward the new civil recovery powers under the Proceeds of Crime Act 2002, and although it has taken a long time, it has seen off every legal challenge. That is a major success, which demonstrates the robust nature of the legislation. The  agency has also succeeded in disrupting criminal activity through the freezing of assets, with some notable successes in the recovery of assets.

After a slow start in the first years, the agency’s performance in recovering assets has improved significantly, with £15.9 million recovered in the last financial year. We want to build on that success. The agency is a relatively small organisation and was, as hon. Members may remember, set up before the Serious Organised Crime Agency came into existence. Now that SOCA is up and running, it makes sense to bring the key skills, expertise and resources of both bodies together in a larger organisation. It is important to note that many of the Assets Recovery Agency’s clients have made their money from serious organised crime, so bringing the agency’s main business together with SOCA will enable those engaged in civil recovery to benefit from the work that SOCA is doing to develop a greater understanding of how serious crime operates.

There are close links between the core business of the Assets Recovery Agency and that of the Serious Organised Crime Agency and operational advantages in bringing them together. The clause and schedule 8 transfer the Assets Recovery Agency’s civil recovery functions to SOCA. However, the civil recovery powers will not be transferred to SOCA alone. The Government want to maximise the use of these powers and believe that there are merits in sharing them across a number of bodies.

Prosecuting bodies have now acquired valuable skills and experience in assets recovery. Where prosecutors have decided that a case does not pass their tests for prosecution and therefore it is not possible to obtain a confiscation order, it may be more efficient for them to pursue civil recovery action than pass the work to SOCA. The clause provides for both SOCA and the main prosecuting bodies to have civil recovery powers.

Nothing in the new proposals will detract from our efforts in tackling organised crime in England and Wales and Northern Ireland through the recovery of assets. The proposals will improve and enhance our efforts. In recognition of the high profile, public confidence and success achieved by the Assets Recovery Agency in Northern Ireland in tackling organised crime and dealing with organised criminals, SOCA will have a designated officer responsible for assets recovery work in Northern Ireland. I should like to say again, to reassure people in Northern Ireland, there will be no diminution in the resources available for assets recovery work there.

The National Policing Improvement Agency is a new body that will support police forces in improving the way they work across many areas of policing. The Assets Recovery Agency, SOCA and the Association of Chief Police Officers agree that the current training and accreditation function should move to the NPIA and the clause transfers that function to it. Although it is a police body, that agency’s commitment to financial investigation will include training and accreditation for non-police staff and for financial investigators outside England and Wales.

The Assets Recovery Agency has many skilled and experienced staff who will continue to make a valuable contribution in their new organisation. The clause and  schedule 9 also provide for the staff of the agency to transfer to SOCA or to the National Policing Improvement Agency as appropriate.

In conclusion, I should like to put on the record once again my appreciation of the work that Jane Earl did in establishing the Assets Recovery Agency, for the work that Alan McQuillan has done in taking over her efforts in the agency and to all the people in the Assets Recovery Agency who have worked so hard in this new area of business, which will help all of us ensure that those who try to profit from crime will not do so.

Question put and agreed to.

Clause 68 ordered to stand part of the Bill.