Clause 72 - Serious default

Proceeds of Crime Bill – in a Public Bill Committee am 3:35 pm ar 29 Tachwedd 2001.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs) 3:35, 29 Tachwedd 2001

I beg to move amendment No. 138, in page 45, line 23, leave out `serious'.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

With this we may discuss amendment No. 139, in page 45, line 29, leave out `serious'.

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

We now come to the important matter of serious default and compensation. The clause provides for circumstances in which compensation may be paid to the subject of a criminal investigation—when proceedings have not been completed, and there has therefore been no conviction—who has incurred a loss in respect of the confiscation and restraint procedure. It applies equally to confiscation and restraint, when either has taken place and subsequently been quashed. It covers both those contingencies.

In effect, the only redress available, in terms of compensation, is in a case of serious default by one of the named people under subsection (9). That covers the actions of a member of the police force, the Crown Prosecution Service or the Serious Fraud Office, Customs and Excise and of the commissioners of the Inland Revenue. I am not sure where the director comes in. The Minister may be able to tell me whether the director is intended to fall within one of those categories. In a number of the activities that might lead to compensation being claimed, the actions of the director or his financial investigators might be relevant. I look forward to the hon. Gentleman's explanation of how the compensation clauses will work.

There is a sense that we are discussing only serious default by the prosecutors, not serious default by those who have brought about the restraining or confiscation orders. That is the point that I wish to explore during the debate. I am conscious, Mr McWilliam, that I may be straying from the precise amendments into a clause stand part debate, and I have no objection to trying to roll the two together. The issues are extremely wide.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

I agree with the hon. Gentleman. I am willing to be relaxed about that. It is difficult to extricate the particular amendments from the clause.

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

On the face of it, it is unlikely that I would vote against clause 72. However, if there were no meeting of minds at the end of our debate, we would—leaving aside for a moment my amendments, which might be voted on—want to return to the issue on Report because it is of considerable importance.

I am looking forward to the Minister's explanation of the provisions. Are we talking about compensation only in cases when the prosecution has been improperly investigated and conducted, or also when the confiscation and restraint procedures have not been properly conducted? I accept that the one is, in a sense, rolled into the other. If somebody is to be eligible for compensation, it must be found that their criminal lifestyle or criminal conduct should not have led to a confiscation, but that is not the same thing as their being acquitted of the offence, which is why I am unclear about who falls within the category of being capable of committing a serious default.

I am assuming, for the moment, that we are covering a wide category of individuals, and that confiscation procedures and restraint procedures would be covered. If that is the case, does the use of the term ``serious default'' create far too defensive a criterion from the point of view of the investigators and prosecutors? I accept that if somebody ends up without a confiscation order, his assets will be returned to him, but—as the Minister acknowledged in an earlier debate—that will not necessarily compensate him for the financial disaster that might have overtaken his businesses when they were out of his hands.

Another issue must therefore be addressed. What sort of compensation are we talking about? It is described, in wide terms, as such compensation as the court believes is just; I assume that that definition is broad enough to extend to economic loss. Will the Minister clarify whether he considers that to be the case?

Photo of Norman Baker Norman Baker Shadow Spokesperson (Home Affairs)

Subsection (6) refers to ``realisable property''. I am concerned that that term might limit the definition of the circumstances under which compensation might be payable. For instance, is it not possible that someone could suffer a loss of status or stature—or economic loss, as the hon. Member for Beaconsfield said—and that that would not be covered by the definition?

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

It might be helpful if I clarify the ruling that I gave. If I took the amendments as they stand, the debate would be narrow; the Committee would discuss only what is ``serious default'' and what is not. It seems to me that the Committee wishes to debate the matter more widely and, therefore, the hon. Gentleman's intervention is in order—although if I had not made that ruling, it would not have been.

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

I agree with the comments of the hon. Member for Lewes (Norman Baker). However, although the reference is to anyone who holds ``realisable property'', I would expect that term to be applied broadly. I also have to say, in fairness to the Government, that compensation for loss of status would take us into very difficult areas. A person who is prosecuted and acquitted is supposed to have had his status restored by the acquittal. Whether that always happens in reality is a moot point, but things become difficult if one starts to go further than that, by saying that, because somebody has had their name plastered all over the newspapers—for instance, a murder allegation might have been made against him—he should be compensated if he is acquitted.

Photo of Norman Baker Norman Baker Shadow Spokesperson (Home Affairs)

I raise the issue because, if someone is wrongfully arrested, they can sue. Perhaps the Bill contains a mechanism that I am unaware of, but I am unsure whether the same sort of options are available to people who are subject to confiscation procedures that are similarly erroneously pursued.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

I am unsure whether the hon. Gentleman is asking the question of the correct member of the Committee, although, no doubt, that member will get a chance to respond.

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

I take on board the argument of the hon. Member for Lewes. I do not wish to take up too much time, however, and I would like to hear from the Minister so that we can, perhaps, move to a wider discussion.

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

The question that I wish to ask my hon. Friend addresses some of the key aspects of the Bill. If people are to be innocent until proven guilty, their status may be diminished, but that is the price that you pay under the burden of proof. I wonder whether my hon. Friend has any comment to make about the reversal of the burden of proof, which may open the floodgates for compensation-related claims for serious or other defaults.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon 3:45, 29 Tachwedd 2001

Order. I caution the hon. Gentleman that he is using the word ``you'' rather loosely.

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

I accept my hon. Friend's argument. Under the old criminal justice system, you were prosecuted and found either guilty or not guilty.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. I am not being prosecuted.

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

On a point of order, Mr. McWilliam. I hope that you will excuse me, but my use of the word ``you'' was rhetorical. I did not think that it would offend the rules of the House. If it does, I shall have to substitute it with the word ``one'', which is rather archaic.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. The hon. Gentleman is right. The word ``one'' is archaic, but those are the rules of the House.

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

So be it.

A parallel system operates within the system. It is possible for someone to be convicted of an offence but not be subject to the confiscation procedures. It is also possible for someone to have a number of convictions but not be deemed to have a criminal lifestyle. My hon. Friend the Member for Cities of London and Westminster and the hon. Member for Lewes are right. The compensation procedures appear to be opaque, but it is not clear which system they will bite.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

Through his amendment, the hon. Gentleman attacks the level, not the type, of default. If he accepts that the right types of default are contained in the clause, does he accept that in subsection (9) we must identify all the relevant parties?

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

I am not sure that I agree. Subsection (4) mentions that the second condition is:

``in the criminal investigation there has been a serious default by a person mentioned in subsection (9)''

I accept that a criminal investigation cannot be ordered by the financial investigator.

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

Yes. However, the oddity of the clause, which perhaps the Minister can explain, is that it leaves up in the air the question of what role the financial investigator and the director have in the criminal investigation. It is possible for someone to be prosecuted but not be subject to a confiscation procedure.

We heard earlier that the financial investigator seems to have some relation to the investigation because of the authorisation that he is given by a court, a police superintendent or some other person. When I first read the clause, I assumed that the financial investigator was a cog in the criminal investigation and so thought it possible that he was included under subsection (9) in that role. I may be wrong. That is why I wanted clarification about the financial investigator's status.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

At the outset of the hon. Gentleman's remarks, he asked why the director was not included in subsection (9). Does he agree that the director cannot be responsible for any of the people mentioned in the three conditions?

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

I accept that the director cannot be responsible for defaults in criminal investigations because he does not conduct them. The clause is about the confiscation of assets, which includes the steps taken in a criminal investigation to restrain assets. Confiscation takes place after conviction, so an overturned conviction is likely to lead to compensation for the consequences of confiscation. One can foresee a situation—not covered by the clause—in which a default takes place during the restraint process and the defendant is acquitted. In such a case, is compensation catered for? I am uncertain about that.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

I wonder whether we are getting closer to the issue. The hon. Gentleman is trying to attack not the threshold of default but the types of default that he says should be contained in the clause.

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

The hon. Gentleman is right that I am concerned about the types of default, but I am also concerned about the threshold. I tabled an amendment to delete the word ``serious'' so that we could consider that. He is right that the test in a criminal investigation should perhaps be serious default, whereas a different test might apply for something that goes wrong in the restraint proceedings. I tabled the amendments to get the discussion going. Once matters are clearer, perhaps we will be able to decide whether this section of the Bill requires substantial amendment.

What is serious default as opposed to default? I would be grateful if the Minister would clarify that matter. Is it the test of, effectively, a malicious prosecution, or is it another test? That is another matter on which we need clarification. Until I have heard from the hon. Gentleman, it is difficult for me to develop further arguments and some of my arguments may not be justified. If the hon. Gentleman would respond and give us an impression of what the clause is designed to achieve, whom it is supposed to cover, what sort of compensation could be recovered under it, and what it would be granted for, we would be greatly enlightened.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. It might have been better to have this debate under clause stand part.

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

The test for compensation under the existing legislation is serious default by the authorities. That is the position under the Criminal Justice Act 1988 and the Drug Trafficking Act 1994. The Government believe that the existing test should be retained, despite the fact that restraint will be available from an earlier stage in proceedings. That is fair and proportionate. Lowering the threshold for compensation would risk impeding the Bill's objective of enabling the wider use of restraint and compensation to recover the proceeds of crime.

I shall deal separately with the amendments tabled by the hon. Member for Beaconsfield. Amendment No. 139 appears to be completely indefensible. It deals with those defendants against whom criminal proceedings are initiated but the proceedings do not result in a conviction or the conviction is subsequently overturned or quashed. The policy on compensation in such cases has been in place for many years and I am not aware of any evidence that it has given rise to injustice. We must be extremely careful to avoid introducing excessive financial risks to law enforcement and prosecuting authorities, which would be extremely effective in deterring them from doing their duty of enforcing the criminal law. It is inherent in criminal justice that a proportion of those against whom proceedings begin will end up not being prosecuted or convicted. There are already ample safeguards in criminal procedure to prevent criminal proceedings from being brought frivolously.

Moreover, the restraint and confiscation proceedings in the Bill contain ample safeguards. The defendant can apply to the Crown court to have the restraint order lifted. If that fails, he can appeal to the Court of Appeal. He can seek to have assets released for his reasonable living and business expenses. If that is refused, he can appeal. When a receiver is appointed, the Bill imposes a requirement to maintain the value of the assets. If the defendant disagrees with the actions taken by the receiver, he can apply to the court. If that fails, he can appeal. If property is irreplaceable, he can ask the court for a ruling to that effect, so that the receiver cannot dispose of it. Given those safeguards, there is no justification for the alteration proposed under amendment No. 139. It would cause real damage to the aim of making the confiscation system more effective.

Amendment No. 138 deals with suspects whose assets are restrained during a criminal investigation, but before a charge has been laid. I concede that Conservative Members have an arguable case, but it is misguided and potentially damaging. At present, those suspects who are not yet about to be charged with anything cannot have their assets restrained. Early restraint is therefore one of the major innovations under the Bill. Until the investigation has been completed, it is not known whether there are sufficient grounds to take criminal proceedings against such people. An investigation may be launched on the basis of suspicion and that suspicion may prove to be unfounded. For that group of people, therefore, it is suggested that the threshold of compensation should be reduced. Under the amendment, any error by the investigator, regardless of its seriousness, would expose the law enforcement to a compensation claim if the error prolonged the investigation, no matter how briefly.

All my arguments about amendment No. 139 apply to amendment No. 138. The Bill provides ample safeguards to persons affected by restraint orders, so that they can ask the court to protect their interests. Moreover, the purpose of bringing forward restraint is to address the problem that is at the centre of the current legislation, which is that assets are often untraceable, have been used up by the time that the suspect has been charged or have been put beyond the reach of the law enforcement agencies.

The hon. Member for Beaconsfield raised an important matter. I do not wish to diminish it. It goes right to the heart of what we are doing in Committee. Subsequently, we and the House must decide whether we understand and support the Government 's position, which is fundamentally that providing for effective early restraint is proportional. That test will be applied if the matter is challenged through the legal system. We believe that it is proportional. Without it, the measures under the Bill will be rendered massively ineffective. We ask the Committee to accept that the threshold is in the right place. It must be kept at that place if people want the provision to be effective so that the proceeds of crime can be confiscated.

Photo of Norman Baker Norman Baker Shadow Spokesperson (Home Affairs)

I apologise for having to pop out for 30 seconds or so in the middle of the Under-Secretary's contribution.

In an intervention on the hon. Member for Beaconsfield, I made a point about subsection (6) and the category of people who would be eligible for compensation in the event of a serious default being proven or accepted—namely, those who had realisable property. My point was that malicious confiscation or people suffering in ways other than through the loss of realisable property were theoretically possible. What safeguards are provided for people in such circumstances?

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

Subsection (6) states that the third condition is that the person had realisable property or has suffered loss.

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

The hon. Gentleman is right. The provision states:

``and has suffered loss in consequence of anything done in relation to it by or in pursuance of an order''.

We are not trying to define property narrowly. A person will have to have shown that he has suffered loss as a result of the activities of the law enforcement agency being brought against him.

Photo of Norman Baker Norman Baker Shadow Spokesperson (Home Affairs)

I prefer the Minister's slip, when he substituted ``or'' for ``and'', which was a much more satisfactory formulation. Will he amend the Bill accordingly?

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

I am not sure whether that would substantively change the existing wording. However, I will check it out and come back to the hon. Gentleman.

The hon. Gentleman said that the matter is entirely outwith people's rights under the criminal law, but people who are pursued through the criminal law have no automatic, statutory right to compensation. Indeed, unlike restraint, arrest carries no statutory right to compensation and claimants must rely on case law. When compensation is requested for wrongful arrest, the standard that the courts apply is fairly high. The courts will generally consider only whether a police officer had reasonable cause for suspecting that a person had committed or was committing an offence for which he could be arrested. If the officer can show that he did, a claim for unlawful arrest is likely to fall. The measures that we propose are not, as the hon. Gentleman suggests, deeply different from those that apply in other circumstances relating to the criminal law.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

I am grateful for the Minister's clarification, which accords with my recollection of the law on damages for wrongful imprisonment. Subsection (1) states that the court may award

``such compensation as it believes is just.''

Does that give the court discretion to give less compensation than the amount of loss suffered if it thinks that the defendant brought the prosecution or proceedings on himself through his own behaviour?

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

My reading of subsection (1) is precisely that. It would be up to the court to decide what was just, which would not necessarily be the exact equivalent of the loss that had been incurred. In doing so, it would take into account the circumstances involved.

The hon. Member for Beaconsfield has been working up to this and has referred to it in previous conversations. If we lower the threshold, we shall provide a considerable deterrent to law enforcement agencies against the use of early restraint. The amendment would render the measures next to useless. It would mean that we might as well not have them at all. If he wants the Bill to be effective, he should think seriously whether that is a line that should be pursued.

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

I sense that the Minister may be coming to the end of his remarks. Will he deal with where the financial investigators' actions fit into the picture? The explanatory notes state:

``Clause 72 provides for compensation to be paid to a person whose property has been affected by the enforcement of the confiscation legislation.''

Therefore, I would expect that a financial investigator's actions that cause a serious default would be susceptible to compensation. As I discussed with the hon. Member for Wellingborough (Mr. Stinchcombe), I was not 100 per cent. sure where such actions fitted into the law enforcement agencies that are listed. Will the Minister clarify the matter?

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

The serious default case must be against those who pursued the case against the defendant. If the financial investigator investigated the size of the assets, he could not commit serious default. We are discussing not serious default cases against the director who conducts the investigation to confiscate assets and round up all that is potentially forfeit or against a financial investigator acting on behalf of the director, but against authorities that are shown to have been unjustifiable in their action against the defendant. If the defendant is acquitted, he is entitled to pursue compensation for serious default, which must be against the authorities that brought the action.

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

I still lack clarity about the matter. Perhaps I lack understanding about the different role of a financial investigator used by the prosecutor and a financial investigator used by the director. In reality, perhaps the director employs the financial investigator only at the time of confiscation and not during the restraint proceedings of the criminal investigation. However, the fact that the financial investigator is not a member of a police force should not mean that if he commits a fault during his handling of the restraint proceedings that leads to loss and the defendant is subsequently acquitted, the exonerated defendant would not have the right to recover a sum beyond the mere repayment of the value seized. That is a critical issue. From the explanatory notes, I understood that the clause provided a compensation mechanism for a person in such a situation. If it does not, we need to know.

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

We are trying to provide compensation for people who should not have been subjected to restraint or confiscation. We are providing compensation not because there was an error in the assessment of the assets, but because the case should not have been brought. A person's entitlement to compensation must be triggered by proof of serious default by those who brought the action that led to the issue of the restraint order and the pursuit of a compensation order that caused the person's loss.

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

I assume that the Minister has concluded his remarks. I continue to be anxious about the matter. May I give the Committee an example? Let us assume that the prosecutor wrongly prosecutes. A criminal investigation occurs and assets are restrained. The person is later acquitted and there is no question of him having a criminal lifestyle. He is entitled to recover his assets. Let us further assume that the prosecution was brought maliciously. In such circumstances, the defendant may be entitled to compensation for malicious prosecution. However, he may be handed back the full value of his assets and have no justification to claim compensation for the way in which they were seized because he has not lost a bean. Although the prosecutor might have committed serious default, after reading the explanatory notes and clause 72, I did not think that a compensation claim under the clause would be made at all because I understood the basis of the clause to be property that was affected by the enforcement of the confiscation legislation.

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

Is the hon. Gentleman asking for compensation to be considered where there has been no loss?

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

No, quite the reverse. I was illustrating that there could be circumstances in which there was serious default in the conduct of the criminal investigation by a prosecutor but, at the end of the day, there was no financial loss. Although there may be an entitlement to compensation for malicious prosecution under separate provisions, that would not concern clause 72 which, according to the explanatory notes, is about

``compensation to be paid to a person whose property has been affected by the enforcement of the confiscation legislation.''

A further example relates to circumstances in which there is not an acquittal, but a conviction that is subsequently quashed on appeal. Again, it may turn out that the prosecution was brought wrongly, that there was malice and serious default and that material was concealed from the defence. However, if there was no loss of property and its value had not diminished, there would not be a claim under clause 72. I would not expect such a claim.

My worry concerns a second example. A prosecution may be brought that is, within the standards of malicious prosecutions, fairly conducted. Proper investigation will have occurred, but the defendant will be prosecuted and acquitted, or convicted with the conviction overturned on appeal—such things happen. In those circumstances, the police or other authorities stated in subsection (9) may not have committed default. However, during the prosecution, a restraining order may have been brought into operation. The person who carried that out—for the sake of this discussion—could have committed a serious default by concealing the value of an asset, undervaluing it deliberately, or committing an act that meant that when the amounts administered were returned to the defendant, they were greatly diminished.

Alternatively, the defendant could be convicted, in which case the asset realisation process would have occurred before the conviction was quashed on appeal. During that process, the financial investigator, who, I think, would have been appointed by the director, could commit a misfeasance by deliberately selling assets at an undervalue or tinkering around with the assets in a manner that was open to criticism. In such circumstances, it could be argued—this is why I seek clarity—that no member of the police force, the Crown Prosecution Service, the Serious Fraud Office, the commissioners of Customs and Excise or the commissioners of the Inland Revenue committed serious default. However, the financial investigator, who is either the creature of the director or the creature of the prosecutor, could have committed serious default.

When I first read clause 72, I expected that that contingency would be covered. Having listened to the Minister's comments, I am not reassured that that is the case, although I may have misunderstood him. However, I assume that it has to be because, if it were not, it is difficult to understand why the provisions under clause 72 are in the Bill at all, although there could be a default by the prosecuting authority and a default by the financial investigator that are wrapped up in one. The matter hinges on the relationship between the financial investigator and the director and the bodies specified under subsection (9).

I hope that the Minister will have the opportunity to return to my next question. I tabled an amendment that would replace the provision concerning costs from the agency with costs out of central funds. It was not selected for debate, but I tabled it because of my anxiety that, once the burden had been removed from ``serious default'' to ``default'', large amounts of money would be taken from the coffers of the police service.

Two arguments must be taken on board. First, it is good that law enforcement agencies should pay out of their own pockets when matters go wrong and that people are not deterred from bringing the confiscation and restraint proceedings in the first place. Secondly, if serious default does emerge, there is a tendency to conceal it because the person is afraid that substantial chunks of the allocation of money that he receives will be used to pay the compensation rather than the money coming from central funds. That second issue was linked in my mind to the removal of the word ``serious''.

Will the Minister explain where the financial investigators and the director fit in? Is it the case that under clause 72, in a criminal investigation, the director and financial investigator are immediately ancillary to those categories of individuals identified in subsection (9)? If they are not, they must be identified separately. Their serious default is more likely to cause loss to the defendant who is subsequently acquitted than the actual conduct of the prosecution and criminal investigation itself. That is my point.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department 4:15, 29 Tachwedd 2001

I do not agree with the hon. Gentleman that the director and financial investigators should be identified separately. We are discussing criminal proceedings and he wants to protect the individual against risks that arise as a result of those proceedings. A person in such circumstances runs many risks. He may be put into custody, not just placed under a restraint order. When people are deprived of their liberty in such circumstances, ex gratia payments are the only redress open to them. The hon. Gentleman knows much more about how that system works than I do. A serious error or misdemeanour by the person who has been managing the individual's assets under the restraint would be a breach of care. Civil redress would then be open to that individual for compensation against the receiver. If there were not serious default by prosecuting agencies, compensation would not be paid under the clause.

I am aware of the hon. Gentleman's other amendment. We guessed the reason for it, which was to allow early restraint to take place without there being a huge worry about the potential loss by the authority that is carrying out the investigation. As he recognises, the problem is that one breaks all accountability by accepting responsibility from central funds for that sort of activity. That would throw up a whole different set of problems.

I hope that I have made myself clear to the hon. Gentleman. He may be shocked by what I say; I do not know. The point that he thinks should be covered is not. There is redress in criminal cases for other things that befall such individuals. Exactly the same would apply in this regard. There is a duty of care on the person who takes charge of the defendant's assets while he is under restraint and, of course, that can be challenged in civil law.

Photo of Norman Baker Norman Baker Shadow Spokesperson (Home Affairs)

I seek clarification on subsection (6), which nags away in my brain. I made a point earlier about ``and'' or ``or'' in the second line, and the Minister kindly said that he would come back to me. I accept that that may not be today and, indeed, mature refection may be helpful. I should like clarification about what happens to property that is confiscated and subsequently returned if the value of that property has changed during the period in which it has been held.

I would like to take the hon. Gentleman back to Second Reading, or certainly the beginning of the Bill, which is relevant to my point. I think that I asked him what would happen if someone gained, say, £100 from the proceeds of crime and they subsequently put it all on a horse and the horse came in at 50:1. Would the authorities try to secure £100 or—

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

We dealt with that this morning. The hon. Gentleman should not proceed with his point.

Photo of Norman Baker Norman Baker Shadow Spokesperson (Home Affairs)

Of course, I accept your ruling, Mr. McWilliam. I was trying to make a helpful comparison with the point that I am about to make, with which I suspect that we have not dealt, but you can tell me if we have done so. If a person has an asset confiscated and in the intervening period between it being confiscated and—

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. We dealt with precisely that point this morning.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

Perhaps I may seek clarification from the Minister about some of my residual concerns, which are similar to those of the hon. Member for Beaconsfield, about how the clause would work and why it does not contain certain provisions. I can readily appreciate why the people who are identified in subsection (9) are identified. That flows directly from the conditions set out in the clause. However, that seems to leave room for injustice when a prosecution or investigation is rightly brought, restraint happens, but loss is occasioned thereafter because of further serious default later in the process. Why is that not covered by this statutory code, instead of being dealt with under other civil proceedings, given that we have the opportunity to put it in the code?

Subsection (1) seems to help the Minister in that it would enable the court to reduce the compensation to a lower level in any event if the person's conduct brought those proceedings on his own head. Given that protection, would it not be worth revisiting the clause at a later stage, to consider whether other serious defaults in the process, which could lead to loss, might not also usefully be covered?

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

My hon. Friend refers to circumstances in which further serious default takes place at a later stage. Will he clarify some of the issues about which he is concerned and when and why that serious default might occur?

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

If proceedings take place, reasonably and rationally—because there was just cause for a prosecution to be commenced—and restraint follows, default might occur in the handling of the goods thereafter, so that loss is occasioned. I appreciate, as my hon. Friend said earlier, that that could give rise to common law proceedings for damages and I also appreciate—at least I think I do—that there are routes within this statute for application to go to court to prevent certain goods being dealt with in certain ways. Apart from that, I wonder whether there is any room for serious default to take place when it is not also covered in a clause that bears that name.

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

I understand my hon. Friend's argument. He is zooming in on what he calls serious default that is committed by those who hold property on the defendant's behalf, which leads to a diminution of the value of that property. As I explained to the hon. Member for Beaconsfield, there is no provision for compensation for that.

If serious default were occasioned, a breach of duty of care would most definitely have occurred, so the defendant would be capable of pursuing compensation through the courts. My hon. Friend would know about that better than I. He asks that we draw into the issue of serious default in criminal proceedings not only those who brought criminal proceedings but those who had a duty of care or who managed the assets during the process. I think that that is what he is saying.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

I am not asking for that, precisely. I ask that we consider, under this compensation provision, whether the Bill excludes provisions for compensation arising from other forms of serious default. I accept the Minister's point about other forms of common law action, but it is difficult to frame a course of action for seeking damages for breach of statutory duty if the opportunity to address that presents itself and is not taken.

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

This is a complicated matter. Let me reflect on the points made by my hon. Friend. We do not intend to punish those who are unreasonably pursued and experience serious default in the criminal system. Those people certainly should be compensated and the Bill allows that. Equally, we do not intend that the prosecution agencies should be placed in such financial jeopardy that they face a serious dilemma or do not use the powers that we are providing in the Bill. That is why the clause is written in that way.

I shall reflect on my conversation with my hon. Friend and come back to the Committee on the subject, but I do not want to do anything that puts such a burden on the prosecution agencies and makes us unable to pursue the proceeds of crime. From his other interventions, I feel sure that he does not want that either.

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

This has been a helpful and interesting discussion. I am grateful to the hon. Member for Wellingborough for his contribution.

Some of what the Minister said about the principles of the clause is troubling. I need only look back at the restraint clauses, for example clause 43(2), to see that it is clear that during a prosecution, restraint proceedings can be brought at the request of the director or an accredited financial investigator. However, from what the hon. Gentleman said, it seems that Bill treats them as distinct and separate from the prosecuting authority. He explained that if anyone were in default because they occasioned a loss by restraining, handling or confiscating assets that subsequently had to be returned, the defendant would have to seek compensation through the ordinary civil procedure.

After I first read the clause, I consulted the notes to the Bill and they do not convey how limited the clause is in relation to the issue under discussion. That caused me to hesitate and to explore the matter. Had I understood the limitations of the clause, I would have tried to draft major amendments to bring the director and the financial investigators within its provisions.

I am not in a position to do that and I want the clause to survive, so I will not invite the Committee to vote against it. However, I will return to the matter on Report because I have identified a serious defect. Where the state is, understandably, taking such draconian action against an individual, and where the Crown court, as the Minister intends, will be fully seized of a matter, including the details of assets, it is wrong that a defendant who has lost out should subsequently have to go through a completely separate civil procedure process against the director and financial investigators. A statutory compensation system should be provided. I hope that the hon. Gentleman will forgive me for thinking that, perhaps, nobody thought things through and that the clause has reproduced the pre-existing structure, without taking account of the implications of the changes that the legislation will bring about.

I hope that, as the hon. Member for Wellingborough suggested, the Minister will reconsider the matter, so that he may be able to return on Report with a compensation structure that tackles the problem. I will not oppose the clause.

I turn to my amendments on default. In light of the Minister's remarks, I am satisfied that amendment No. 139 should not be put to the vote. I take on board his remarks about why the term ``serious default'' should remain in certain circumstances—they were the most cogent arguments that he put forward. However, with regard to restraint issues, ``serious default'' should be replaced by plain ``default''; that should be the standard in such cases. Therefore, I will be inviting the Committee to vote on amendment No. 138. I appreciate that the hon. Gentleman is unlikely to agree to accept it, but I am trying to highlight a problem that I have identified.

If the compensation regime is improved in the way that I think that it should be, amendment No. 138 may cease to be necessary. However, as matters stand, I intend to press that amendment and I urge the Minister to examine the compensation regime again because it is flawed.

Question put, That the amendment be made:—

The Committee divided: Ayes 3, Noes 13.

Rhif adran 11 Adults Abused in Childhood — Clause 72 - Serious default

Ie: 3 MPs

Na: 13 MPs

Ie: A-Z fesul cyfenw

Na: A-Z fesul cyfenw

Question accordingly negatived.

Clause 72 ordered to stand part of the Bill.

Clauses 73 and 74 ordered to stand part of the Bill.

Further consideration adjourned.—[Mrs. McGuire.]

Adjourned accordingly at twenty-five minutes to Five o'clock till Tuesday 4 December at half-past Ten o'clock.