Clause 55 - Sums received by justices' chief executive

Proceeds of Crime Bill – in a Public Bill Committee am 10:30 am ar 29 Tachwedd 2001.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs) 10:30, 29 Tachwedd 2001

I beg to move amendment No. 134, in page 36, line 29, leave out subsection (7).

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

With this it will be convenient to take amendment No. 135, in clause 57, page 38, line 4, leave out subsection (6).

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

My earlier question was a lead-in to clause 55, which concerns the sums received by justices' chief executives. The clause, as we are told helpfully in the explanatory notes, sets out how an enforcing justices' chief executive must dispose of any moneys received in satisfaction of a confiscation order, whether from a receiver appointed under clause 50 or otherwise. We are told that the provision is similar to the current legislation except that an existing power for the justices' chief executive to reimburse the prosecutor out of confiscated moneys for sums the prosecutor has paid to a receiver in advance has been abolished, and the money will go to the Consolidated Fund.

After reading that note, I read clause 55. I had great difficulty understanding subsection (7), which is why I tabled an amendment to remove it, on the basis that, if I could not understand it, perhaps it had no business to be in the Bill. The sensible thing to do may be for me to sit down to allow the Minister to explain it.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

The hon. Gentleman employs a dreadfully unfair tactic. If he looks at my copy of the Bill, he will notice that there are a number of question marks scribbled by subsection (7) as well. I shall attempt to help him understand how subsection (7) works.

The amendment would require the Crown to bear the cost of enforcing a compensation order where payment of the order was ordered out of confiscation money. The Bill carries forward existing legislation. The effect of clause 14(5) and (6) is to empower the court, where it makes both a confiscation order and a compensation order in the same proceedings, to order any shortfall in the payment of the compensation order out of the confiscation money, provided that the offender does not have sufficient funds to pay both orders. In effect, the provision enables the enhanced confiscation order enforcement powers to be applied to assist victims to receive their compensation.

The provisions that the amendment would delete deduct the cost of enforcement, pro rata, from any confiscated money that is paid out to satisfy the compensation order.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

It seems that flagging the matter has a wider purpose than merely examining the drafting. I thought that what the Minister said was happening, although I was not 100 per cent. sure. The matter is extraordinary because a sum that a person has been ordered to receive by the court is deducted from compensation orders. I am worried about the effect on victims of crime.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

The hon. Gentleman is right. He has stumbled on an important matter which should be exposed to scrutiny. I shall continue to explain the Bill's current provisions and he may raise any resulting matters.

There is a special provision in the confiscation regime in which both orders are made in the same case. Confiscation enforcement techniques may be used exceptionally to enforce a compensation order. Under such circumstances, compensation order recipients would enjoy the benefits of enforcement techniques to which they would not normally be entitled. Therefore, it is reasonable that they should bear their share of enforcement costs on a pro rata basis. I tell the hon. Gentleman—for the benefit of what he may wish to say, although he probably has more knowledge than I about the matter—that compensation orders, even those ordered by the Crown court, are relatively small. We envisage that confiscation orders will be made for substantial amounts. Therefore, the costs must be pro rata to ensure that, in the majority of cases, only a small proportion of costs will be reclaimed from the compensation order rather than attached to the confiscation.

That is the Government's thinking about the Bill. The hon. Gentleman did not stumble over only a drafting matter; it is a more important matter which he may wish to pursue.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

Clearly, I had understood the gist of the provision, which raises some interesting issues. The Minister may be able to enlighten the Committee about his comment that, at the moment, the compensation regime does not cover costs. I was slightly surprised to hear that because, although that may be so in theory, I have not been aware in practice of an order for compensation being made and resulting in complex costs of enforcement, partly I suspect because generally speaking the money has been readily available for that.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

I hope that I did not say that. I did not mean to. I was trying to say that, at present the provisions are not available to enforce compensation, so powers under the confiscation regimes can be used to benefit victims. The provisions are not at present available for victims, so that route would not be available—not that currently they would have to pay.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

The Minister is most helpful. As I said, I must beware of giving the impression of having an excessive knowledge. I was familiar six, seven or eight years ago with cases in which compensation orders were made, but not from the field of practice in which I have been working more recently. I do not remember as a matter of practice difficulty being experienced when the court rules that compensation of £1,500 is payable to the victim and deductions are made from the sums that have been ordered, although, if that sum were not readily available—in my experience it usually has been—I suppose that some costs could, theoretically, be incurred.

The circumstances in this case are rather different. The Minister said that the chances are that the confiscation orders will be made in respect of very substantial amounts, as we hope. I accept that the costs of realising those assets may be substantial. We cannot escape that. The Government will no doubt do their best to minimise the cost, as will the court and even, I suppose, the receiver, although perhaps I have a slight prejudice against receivers.

Large sums are involved. The victim, who may in some circumstances have had an order made that he should be compensated by a small sum, may find when the cheque finally arrives in the post that a pro rata deduction has been made to reflect the enforcement costs. I wonder whether that might cause a sense of injustice. I can envisage The Sun headlines when the court orders that a victim of crime should receive £2,500 compensation and she receives only £2,000 as the enforcement costs on the huge sum involved in the confiscation have, unfortunately, swallowed up an awful lot because of the receiver or other circumstances.

I accept the Minister's point that it would be perfectly legitimate to argue that the person receiving the compensation has been the beneficiary of the skills of the receiver in realising the assets. However, I have serious doubts that, in practice under compensation orders, huge problems have been experienced in realising assets. The Minister may know much more than I do about getting hold of assets to pay people under compensation orders. I believe that the system may ultimately be criticised because it seems unjust to the victim, who will often receive a small sum.

The matter seems to be a public policy issue. A long time ago, Parliament introduced compensation orders so that victims should be compensated by criminals to a sum assessed by the judge as fair and reasonable for the victim to receive. We are now introducing a system in which the victim will find that moneys have been deducted from that payment to cover administrative costs. I do not believe that that has happened in the past. Far from the poor old victim thinking that he has benefited from the confiscation regime, he will feel that it has done him out of a sum of money.

The question will then be: who should have priority in relation to confiscated assets? Should it be the victim or the state? My view is that it should be the victim. If the court has said that a victim needs compensation, the state, which obviously wants to confiscate assets, should give priority for compensation to the victim. In those circumstances, I ask the Minister to reconsider whether subsection (7) should be included. At the moment, I am open to persuasion that it should be maintained. I will not necessarily press the matter to a vote, but I am worried about it. It seems like the heavy hand of bureaucracy affecting the rights of victims and the compensation that the court feels that they should receive.

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster 10:45, 29 Tachwedd 2001

There is a temptation on the part of the state, in the broadest sense, or the justices' chief executive, to have two bites of the cherry in terms of the cost of bureaucracy. One cannot underestimate the extensive costs that may be part and parcel of the process. I entirely agree with what my hon. Friend said. My word of warning to the Government is that the newspaper headlines about victims who were told that they would get X, but end up getting X minus 30 or 40 per cent., will not look good. The state, in the broadest sense, is not only able to compensate itself out of the victim's money, but will also no doubt be the beneficiary in a fully fledged confiscation order. I am sure that that is not entirely what is intended and I hope, in the great majority of cases, that the sums will be de minimis.

The real worry is the sheer cost of setting up the agency and all the other paraphernalia that goes with it in relation to court proceedings. There will clearly be a temptation for the agency, which will no doubt be under considerable financial constraints from the Treasury—again, it is a matter of public policy as much as anything else—to consider how its costs can be ameliorated through such a process. That may be to the detriment of genuine victims who are looking for compensation from those who are subject to such proceedings.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. I am not accusing hon. Gentlemen of continuing to do this, but I remind hon. Members that the repetition rule does not apply to one person alone. If other Members repeat an argument already made, the rule kicks in.

Photo of Alistair Carmichael Alistair Carmichael Shadow Spokesperson (Energy and Climate Change), Liberal Democrat Spokesperson (Energy and Climate Change)

I may be about to fall foul of it. Hon. Members will recall that, on Second Reading, concerns were expressed about the position of innocent third parties. The hon. Member for Beaconsfield, through an exemplary use of cosmetic procedure, identified one of the most innocent of innocent third parties. I associate myself firmly with his remarks.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. The rule is tedious repetition.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

Opposition Members have said things with which I do not disagree. However, I do not entirely agree with everything that the hon. Member for Cities of London and Westminster (Mr. Field) said. He must consider the fact—as we must—that the compensation order will be paid because the confiscation proceedings have been paid for and provided, and out of money that is confiscatable. Money that is the proceeds of crime and would have been returned to the state will have been diverted to pay for compensation for victims, after a pro rata share of the costs of discovering and levering out that money has been deducted under the Bill.

I ask the hon. Member for Beaconsfield to withdraw the amendment and I hope that he will. However, for the sake of further consideration, I give the Committee my understanding of the current situation and the size of the matter that we are discussing.

Where a confiscation order was made, the magistrates court would enforce it either by voluntary payment from the defendant or means such as an attachment of earnings, a benefit order or a distress warrant. The magistrates court, not the victim, must meet the enforcement costs. Ultimately, as with a fine, a defendant could serve a term of imprisonment for failure to meet a compensation order. In 2000, the criminal court ordered 102,400 offenders to pay compensation orders. The average compensation order was £150 in a magistrates court and £1,292 in the Crown court. It is thought that the offender pays about 25 per cent. of the compensation that is awarded within the first 25 days and the remainder is spread in instalments over periods that are usually up to 12 months. A high proportion of cases require enforcement action—perhaps 60 per cent.—and around 8 per cent. of compensation cases result in custodial sentences. That is old data—we do not have any more recent—and the last formal research was conducted in 1992.

I give those figures to allow the Committee to consider the matter and I hope that the hon. Member for Beaconsfield picked up, from the tone of my reply, that I share some of his worries. On the basis that we will continue to examine whether the Bill should remain as written, and of my commitment to return to the matter, I ask him to withdraw the amendment.

Photo of Alistair Carmichael Alistair Carmichael Shadow Spokesperson (Energy and Climate Change), Liberal Democrat Spokesperson (Energy and Climate Change)

Is this an accurate understanding of the Minister's position? He mentioned the average amounts that are recovered at present. The hon. Member for Beaconsfield said that the measure will affect only a small number of people. However, that is an acceptance that people will be affected and provision should be made for them.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

No matter where we go with the matter, there will always be potential difficulties. The overwhelming majority of compensation cases will not involve confiscation.

Photo of Alistair Carmichael Alistair Carmichael Shadow Spokesperson (Energy and Climate Change), Liberal Democrat Spokesperson (Energy and Climate Change)

With respect, we are talking about extending the legislation to include, for example, a large fraud case in which one could imagine that compensation would be appropriate.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

I do not know whether the hon. Gentleman picked me up the wrong way round. I said that the overwhelming majority of compensation cases will not involve confiscation, rather than saying that confiscation cases will not involve compensation. I have not quite got my head around the percentage of confiscation cases that would involve compensation. In all probability, we will wind up dealing with compensation of victims differently because, unless the Crown pursues confiscation, facilities that are brought to those cases will not be available to victims. If the compensation case deals with a relatively small amount in comparison with the confiscation order, to what extent ought we to be looking to pro rata that out? Is it worth doing that, given the presentational difficulties with regard to cases in which we have identified the amount of compensation and are looking to claw a part of it back to repay the costs?

If the compensation was the overwhelming majority—although the statistics suggest that that might not be the case—we might take a different opinion on that matter, because the resources provided by the confiscation proceedings would be effectively applied to recover substantial amounts at great cost, for the benefit of a victim who would have had little or no chance of getting hold of that sum had he been left to his own devices.

The issue under discussion is neither easy nor straightforward. It requires further consideration and I undertake to do that. For that reason, I ask the hon. Member for Beaconsfield to withdraw the amendment.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

The Minister has been fair and the Committee's discussion has fully covered a difficult matter.

Although the relevant statistics are old, the Minister highlighted that it is unusual for thousands and thousands of pounds to be ordered to be paid to an individual. That might happen in some fraud trials, but small sums are usually involved. In those circumstances, to impose a clawback to cover the administration costs would be considered unfair by the public. It will bring the system into disrepute—especially as it will be noted that substantial sums are still being recovered by the state.

I am sure that the Minister appreciates that things would be rather different if one could say, ``I am sorry, but those were the costs of getting this money for you, and there is no other money, because that is all that we could lay our hands on.'' However, the matter appears less straightforward, given that the state are pouring into the Consolidated Fund tens or thousands—if not millions—of pounds from the same source. In those circumstances, the public would expect that the victim, who has had an assessment made for compensation, should come first.

However, in keeping with the spirit of co-operation and the friendly tenor of the debate, and given the Minister's assurance that he will further consider the matter, I am happy to withdraw the amendment.

I have not pressed the Minister about who proposed that the clawback should be introduced—whether it was the Lord Chancellor's Department, or the Treasury—but I suspect that the idea might not have originated in the Home Office. Someone ought to go and have a quiet word with whoever dreamed it up.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

It is unfortunate that the hon. Gentleman has raised that point, as it is in existing legislation.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

A previous Conservative Government probably passed it.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. I suspect that the relevant Committee was also chaired by me.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

Mr. McWilliam, you, as the Chairman, have to exercise impartiality, so nobody can blame you in this instance.

One of the benefits of discussing new legislation—the Minister has sometimes taken me to task about this—is that we debate some clauses that have been on the statute book. That is a good thing, as it gives us an opportunity to see what our predecessors nodded through at various points of the morning or the evening sittings of Committees.

I am grateful to the Minister for the undertaking that he has given and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 55 ordered to stand part of the Bill.

Clauses 56 to 63 ordered to stand part of the Bill.