I beg to move amendment No. 96, in, page16, line 44, leave out `the' and insert `a'.

This is the simplest of amendments. When I was reading through the clause, it occurred to me that the word ``the'' would be better rendered as ``a''. Although it is a straightforward matter, it struck me as odd, because I read ``the recipient'' as implying an individual, when, in this context, it clearly refers to anyone who happens to be a recipient.

I am sure that the hon. Gentleman has tabled the amendment in an attempt to get his own back for all the hard work that he is having to do, in Committee and in the House.

If the Government could have discerned any difference that would be made by changing the definite article to the indefinite article, we would be happy to accept the amendment as an improvement to the Bill. However, there is no discernable difference, and therefore there is no justification or reason to accept the amendment.

I am unsure to what extent I ought to go along with this attempt to spin out the Committee's consideration of the matter. However, we have read the alteration that the amendment proposes time and again, and we do not think it means anything, and I do not know what more I can say.

I am not trying to spin out the Committee's proceedings. We have only taken about 30 seconds over the matter, and I do not intend to take much longer. I think that the version that I have proposed is better English. If we do not take the opportunity to flag up such points, we will not, in the long term, obtain changes to the way in which legislation is drafted. Although, I think that ``a'' is better than ``the'', I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

I want the Government to clarify several substantial issues concerning the clause.

As the clause touches on matters that I have previously raised, I will do my best to be neither tedious nor repetitious. However, on this occasion the key issue that I have raised has been amplified, and there are also questions that need to be answered that have not been raised in previous debates.

The clause brings into focus what happens if the available amount is less than the court decides. With regard to that, I will not explain again why I believe we could be tougher. Suffice it to say that the clause makes it crystal clear that, where there are insufficient funds to meet an order, the court is being invited to reduce that order and I continue to question whether we should be doing that. However, I have said enough on that subject.

Subsection (4) addresses the distribution of available assets, with regard to bankruptcy or winding up. That is an important matter. As I understand the situation with bankruptcy or other such matters, the Inland Revenue has a prior claim, as does Customs and Excise, on the assets that are realisable, and distribution to other creditors takes place afterwards. Again, I am a layman, and that is how I have always understood the law. If I am wrong, perhaps someone will put me right. It would be helpful if the Government were to say what priority such claims for confiscation orders would have. If they are prior claims over general creditors, would they come before or be ranked equal with the Inland Revenue and Customs and Excise? That information would be useful not only to us but to the courts and those seeking to collect the money.

In the light of the priority given to a claim when somebody goes bankrupt, will the Minister reassure us that by making reference to the issue of bankruptcy, we are not pointing to a loophole in the legislation? Before I became a Member of Parliament, I was in business for long enough to know that some people found going bankrupt a useful loophole when they faced mounting debts. Surprise, surprise, after not too long a period, if I was one of those who was owed the money, they would cease to be bankrupt, and before I knew where I was, they were back in business again. If that were to apply to the criminal fraternity, what would happen after the process of someone being declared bankrupt, the order being reviewed, and the amount owing being reduced? Surprise, surprise, not all that long later, the person would return like phoenix from the ashes and have his bankruptcy discharged. Has the court lost the power to go back and confiscate that money, or is it written off? If it is written off, that is wrong. Will the Minister assure me that notwithstanding bankruptcy and winding up, if those assets become available again at some stage in the future, the full amount of the original order should be sought and collected?

My other concern relates to subsection (5), which refers to inadequacy. It states that if the court is to make a judgment on how much the amount should be reduced by, it should disregard things wholly or partly. My worry is that if something is wholly to be disregarded, it is the entire amount. However, if it is partly as a result of something, will a calculation be made as to what percentage ``partly'' means? That gives rise to a sense of injustice. If something is partly to be disregarded, one can pursue the whole amount nevertheless, but if one partly disregards things, should not one partly disregard the amount collected by the same percentage? Will the Minister comment on that?

The confiscation system is designed to ensure that orders are not made for more than the value of the property available to justify them. However, it may happen that the realisable property, if assessed by the court at the defendant's request, loses its value before the order is fully satisfied. The clause therefore enables the court to reduce the amount payable. The clause is based on existing legislation with one important exception, which is worth flagging up at this point. We are transferring the functions currently dealt with by the High Court to the Crown court, making it the single venue for confiscatory procedures. As is well known, we have already made some general arguments in favour of the change. The change of venue from the High Court to the Crown court is particularly valuable. One of the weaknesses of the current system is that the Crown court makes the confiscation order, which is then enforced by a magistrates court. The result is that the Crown court loses touch with the order.

The hon. Gentleman raised several points that he has already mentioned. He raised again the issue of orders that have been placed on the defendant, which he believes should not be outside the confiscation proceedings. When orders have been made on the defendant for payment of fines, those fines must be excluded from the proceedings. Otherwise, we would be double counting and claiming back more than the proceeds of crime.

With regard to bankruptcy, the hon. Gentleman is absolutely right. If bankruptcy proceedings were to take precedence over confiscation proceedings—for example, in respect of property—long after a restraint order had been put on the property, a considerable number of people could come up with bankruptcy proceedings to prevent confiscation. When confiscatory proceedings have started, bankruptcy cannot then take precedence. It will not be possible to suggest that bankruptcy proceedings that started before confiscation proceedings should be disregarded and overridden by a confiscation procedure that starts after that date. I do not know how that could be achieved, but we are trying to close the potential loophole that he referred to by ensuring that bankruptcy proceedings cannot be used to provide a way out for people facing confiscation orders.

I do not know if I have satisfied the hon. Gentleman. He said before that he does not accept my points. I do not know what more I can say to satisfy him.

I am grateful to the Minister for his comments on bankruptcy. Can he clarify my query about where the priority of any claim, in respect of bankruptcy, would lie? Would it be before or after the Inland Revenue, or with the general creditors?

We are not changing the bankruptcy procedures, and the hierarchy within them will remain the same. The procedure that starts first is the one that takes precedence. If confiscation proceedings have commenced, they take precedence over bankruptcy proceedings. If bankruptcy proceedings have started before any confiscation proceedings have begun, the bankruptcy proceedings take precedence.

My understanding is that when bankruptcy proceedings are initiated, there is a pecking order that determines which creditors will get the money. It would be helpful to know where in the pecking order a particular creditor would come.

Bankruptcy proceedings must be settled before any confiscation can take place. We are not changing the order of creditors within the bankruptcy proceedings.

I fully appreciate that, when bankruptcy proceedings have preceded a confiscation order, there should be preferred creditors—for example banks and mortgage companies—who would claim some of the assets. Is the Minister saying that non-secured creditors would hold themselves in a preferable position to the state in that regard?

The clause is not changing the bankruptcy proceedings. Those that have already commenced take precedence over confiscation proceedings. After the bankruptcy proceedings have been settled, the claim for compensation can be pursued. We are not proposing to unpick bankruptcy proceedings that have already commenced.

My hon. Friend's concern is that there will be a significantly diminished pool if such a view is taken. If you have bankruptcy proceedings under way, unless it is preferred that creditors should have the first bite at the cherry, should there not be some variation? Surely, under confiscation proceedings, the state will face a significantly diminished pool or will the variation be on the whole sum? Will preferred creditors receive a share that will take account of the variation or will they receive their full amount in advance?

Order. I assure the hon. Gentleman that, although I took my wife Christmas shopping in New York at the weekend, I do not have bankruptcy proceedings under way.

I am sorry, but I am not sure on what the hon. Gentleman is inviting me to agree with. If a defendant goes bankrupt before confiscation proceedings can be taken against him, the ability to confiscate any of the proceeds of crime will be reduced. That is self-evident. I do not know what more I can say.

I assure the Minister that I am not spinning out the matter. A real loophole is opening up, and I should be grateful if he would concentrate carefully on whether I might be right. He said that, in the event of bankruptcy proceedings being commenced before the order is made, they would flow and the order would come into effect on what is left thereafter. If that is so, and someone thinks that he will be charged or is part way through a court case and has a nasty feeling that he is about to lose, it would pay him to file for bankruptcy in attempt to get some of the money that could be confiscated shifted to a creditor where he might have an interest.

Order. I have been double-checking. We are dealing with variation orders. Bankruptcy is dealt with under part 9. If the hon. Gentleman wants to debate bankruptcy in detail, he should wait until we reach that part of the Bill. I understand the linkage difficulty, but that is in relation only to a variation of the order.

I am grateful for your advice, Mr. McWilliam. In the circumstances, I am sure that I have given the Minister due notice of such matters and by the time we discuss that clause, no doubt he will have an answer to my questions.

The hon. Gentleman is surely right that, if someone is being pursued on a charge for which there may be substantial proceeds of crime, it may be in his interests to commence bankruptcy proceedings to frustrate the confiscation. There are other ways in which to dispose of the assets before the finalisation of the charges, but that is one of the reasons why we introduced the concept of restraint to the start of the proceedings. If restraint is applied before bankruptcy proceedings have commenced, that takes precedent. I do not know how, and in what circumstances, we could justly disregard bankruptcy proceedings that had already commenced ahead of any other proceedings that had even been started against the defendant. We have done what we can to close any possible loopholes, and we cannot go further than that.

Notwithstanding the fact that the provision goes wider than bankruptcies, I should be grateful if the Minister could clarify the circumstances in which the court has reduced the amount to be paid by the guilty person. If it were found subsequently that a scam was being worked and that assets were being concealed, surely the court or prosecutor would still be able to return again to claw back money that had been evaded the first time by false declarations about bankruptcy or limited means.

As we have exposed in previous confiscations, in theory the prosecutor can return within a six-year period if he thinks that the benefit was not calculated correctly and he can convince the court that there should be a revaluation of the benefit. That would also apply to the circumstances outlined by my hon. Friend the Member for Pollok.

I may have solved a potential problem for the Minister. He will note that, with one significant difference, the last two lines of subsection (3) are identical to those under clause 22(7), which my hon. Friends the Members for Spelthorne and for Beaconsfield and I were worried may be ambiguous. Subsection (3) states:

``it may vary the order by substituting for the amount required to be paid such smaller amount as the court believes is just.''

Substituting the word ``smaller'' with the word ``larger'' would solve the problem to which we referred when debating clause 22. Because the same words are used in the provisions, albeit with the addition of ``smaller'', there is no reason why we should not add the word ``larger'' under clause 22(7) and thus achieve the clarification that we wanted when the Minister kindly accepted that we were not trying to water down the Bill. I hope that my suggestion has been helpful to the Minister and his officials.

Question put and agreed to.

Clause 24 ordered to stand part of the Bill.