Clause 300 - Compensation

Proceeds of Crime Bill – in a Public Bill Committee am 2:45 pm ar 10 Ionawr 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department 2:45, 10 Ionawr 2002

I beg to move amendment No. 335, in page 173, line 20, leave out subsections (2) and (3) and insert—

'(1A) If, for any period after the initial detention of the cash for 48 hours, the cash was not held in an interest-bearing account while detained, the court or sheriff may order an amount of compensation to be paid to the applicant.

(1B) The amount of compensation to be paid under subsection (1A) is the amount the court or sheriff thinks would have been earned in interest in the period in question if the cash had been held in an interest-bearing account.

(1C) If the court or sheriff is satisfied that, taking account of any interest to be paid under section 295 or any amount to be paid under subsection (1A), the applicant has suffered loss as a result of the detention of the cash and that the circumstances are exceptional, the court or sheriff may order compensation (or additional compensation) to be paid to him.

(1D) The amount of compensation to be paid under subsection (1C) is the amount the court or sheriff thinks reasonable, having regard to the loss suffered and any other relevant circumstances'.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

With this it will be convenient to take amendment No. 420, in page 173, line 21, leave out 'exceptional' and insert

'such that the court or sheriff considers them reasonable'.

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

Amendment No. 335 will ensure that the court has discretion to pay compensation in lieu of interest when cash is not paid into an interest-bearing account under clause 295. In most cases cash will be paid into such an account, but there are circumstances in which it will not, for example, if the physical cash is required as evidence in criminal proceedings. In such circumstances, the safeguard of the interest-bearing account that provides financial recompense would be lost.

Subsection (1B) of the amendment provides that the amount of compensation to be paid in such circumstances is the amount of interest that the court considers would have been earned if the cash were paid into an interest-bearing account. Subsections (1C) and (1D) make consequential amendments to clause 300 to take subsections (1A) and (1B) into account. Clause 300 already makes provision for compensation to be paid over and above interest payments in exceptional circumstances. Subsections (1C) and (1D) extend that to allow compensation to be paid over and above the money paid in lieu of interest under subsections (1A) and (1B) in exceptional circumstances. Additional compensation will be awarded in only exceptional circumstances because, in most cases, the accrued interest or sum equivalent to such interest should be sufficient compensation.

An example of a case in which additional compensation might be awarded under subsection (1C) would be one in which the claimant satisfied the court that the detention of the cash had prevented him from concluding a business deal and that the deal would have earned him a sum exceeding that earned through interest. If the court is satisfied by the facts, it might be reasonable to consider those to be exceptional circumstances, particularly if the person concerned was not wealthy. That is only an illustration. In every case, the court will decide based on the circumstances. The same approach to compensation was taken in paragraph 10 of schedule 1 to the Anti-terrorism, Crime and Security Act 2001, which received Royal Assent before Christmas.

Amendment No. 420 would lessen the test that the court must apply when an application for compensation is made. That test would then be whether the court or sheriff were satisfied that loss was suffered as a result of the detention and whether the court or sheriff considered the circumstances reasonable. For compensation for a sum greater than the amount of interest that would have accrued, the test is that loss has been suffered and that the circumstances are exceptional.

Government amendment No. 335 would amplify the original compensation provisions in clause 300. Under the revised clause, it is made clear that if the cash is not held in an interest-bearing bank account during its detention, the amount of compensation will be the interest that would have been paid had the money been held in such an account. The general

principle is that the payment of interest should be sufficient compensation.

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

In most cases, the payment of the interest is likely to be sufficient, but in some circumstances, the person concerned may be able to show that the money would have been used in a particular way, and that a loss has therefore occurred. Does that fall into the ''exceptional'' category? It would be helpful if the Minister could tell us what the word ''exceptional'' means, because it is on that issue, and the anxiety that ''exceptional'' may be too high a test, that amendment No. 420 hangs.

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

I do not think that I can spell that out. People will have to make the case that exceptional circumstances apply. The hon. Gentleman is right to say that such a case may be made if the money would have been used to realise profits far greater than the interest that would accrue from a bank account. The court should consider those circumstances, and we have made provision for that. We are talking about cash and items that are transferable for cash. We believe that, in the overwhelming majority of cases, interest alone will be the appropriate compensation, but the court should be allowed to hear such a case.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Will the Minister clarify what would happen if someone swore blind that they were heading to the bookies to put £25,000 or £500,000 at odds of 20 to one on a horse that subsequently won? Are those exceptional circumstances? If someone alleges that they were about to make a transaction that would have resulted in substantial profit, would that be accepted? We must watch that we do not open the door to conspiracies against the public purse.

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

My hon. Friend makes a fair point. That would be a matter for the court to decide. If the court considered the case once the horse had already won, it would be difficult for the person to prove their intentions for the cash.

In some circumstances, the person may be able to persuade the court—and witnesses may be able to assist him in this—that he was on his way to conduct a transaction that would have made a substantial profit. If he could prove that, it would be only right for the court to consider the loss imposed on him. Such a person would have had his cash detained, although he was going about his lawful business. I know that my hon. Friend thinks that people who wander around his constituency or elsewhere with large amounts of cash are strange, but strangeness is not grounds for bringing proceedings. Therefore, if the person can show the court that he had such an opportunity and that the unfair activities of the customs officer or the constable deprived him of profit, surely it is only right that the court should be allowed to consider the matter.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

I assure the Minister that if a person in my constituency—and in other areas of Glasgow—were able to wander around with substantial amounts of money in their pocket, it would not be difficult for him to produce witnesses who would say that he was about to undertake a deal that was going to make him

a huge amount of profit. Does not my hon. Friend recognise that there are substantial dangers in the Government's action? I accept that there are problems for a person who has had his money seized, but we must be careful not to leave the door open to abusive claims.

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

Obviously there are dangers, but there are also deterrents, such as perjury, that give people pause for thought before they lie in court about what was intended. The alternative is to say that under no circumstances should a person be compensated over and above the interest that is available from an interest-bearing bank account. Grave injustices could arise from such a decision. That is why we intend that, when exceptional circumstances have been satisfactorily proven, the court may consider compensation above that level.

There is no need to discuss the matter further and I ask the hon. Member for Beaconsfield to think about the matter. He is, in effect, proposing to lower the threshold at which the court must consider exceptional circumstances. Most cases would involve cash, and the appropriate level of interest is the right amount of compensation. Only in exceptional circumstances should a greater amount be considered.

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath

The Minister thought that, because my hon. Friend the Member for Beaconsfield intervened, he would pursue amendment No. 420, but we agreed that I should move the amendment. The Law Society of Scotland suggested the provision and we strongly support it. It must not be forgotten that we are talking about innocent people. That issue underpins clause 300. From the way in which he responded to his hon. Friend the Member for Glasgow, Pollok (Mr. Davidson), I know that the Minister recognises that.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. Amendment No. 420 cannot be subject to a separate Division, because if amendment No. 335 is accepted, the text that it amends would be withdrawn from the clause. Does the hon. Gentleman understand that?

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath

I understand that, but I believe that it is in order, Mr. McWilliam, to address the issue.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. The hon. Gentleman is perfectly in order. I am merely pointing out to him the implication of him saying that he would ''move'' the amendment. I am just explaining the situation.

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath

I am grateful to you, Mr. McWilliam. The point that my hon. Friend's intervention raised remains relevant. Before we read the Government amendment, the Law Society of Scotland queried—and we agreed with this—the use of ''exceptional'' in the Bill, which is why we tabled amendment No. 420. We want to propose, as the Minister has correctly set out, a wider test. The Minister's revised wording of the clause still contains that exceptional circumstances test.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

On a point of clarification. I am considering the wording that the hon. Gentleman advocates and the reasons behind it. Would it be preferable to replace ''them'' with ''it''? Otherwise, the amendment would not make

sense and would not catch the meaning that he is seeking to articulate. I will leave that with him. I make that suggestion simply so that I may understand the nature of his argument.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

If I can be of assistance, let me explain. Because of the way in which amendment No. 420 is framed, the relevant words will disappear if Government amendment No. 335 is included in the Bill. The words reappear in the subsequent amendment. A way around that would be to attempt to amend the subsequent amendment at a later stage in the Bill.

In passing, I ask hon. Gentlemen who choose to grow a beard in the recess to let me know that they have done so, in order that I may recognise them. I also make that request of hon. Gentlemen who shave one off.

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath 3:00, 10 Ionawr 2002

In relation to the hon. Gentleman's intervention, we shall look again at the wording of our amendment to take account of the serious point that he makes. As you have reminded us, Mr. McWilliam, we may need to table further amendments to the Government's revision of the Bill at a later stage. Our basic point is that the provision should not apply only in exceptional circumstances. Starting from the premise that clause 300 deals with a situation in which someone's cash is taken, and no forfeiture order follows—because it turns out that they were not doing anything wrong, and they were not one of the Mr. Bigs that the hon. Member for Glasgow, Pollok wants to hit—it is not appropriate to have too high a threshold for the person to claim that he has suffered a loss. It should not only be in exceptional circumstances; the Law Society of Scotland is right to say that it should be what the court or sheriff considers reasonable. I am sure that it will be possible to return to the issue at a later stage or in another place and produce a further amendment to the revised Bill, which would introduce the concept of reasonableness and give the court or sheriff discretion.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

I now understand what the hon. Gentleman is suggesting. Will he confirm that he wants the Bill to allow compensation to be awarded if the court considers that it is reasonable to do so?

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath

Exactly. I am grateful to the hon. Gentleman.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

I am grateful to have the opportunity to respond to the points made by the hon. Member for Surrey Heath (Mr. Hawkins) when he referred to my anxieties about a Mr. Big. He suggested that the circumstances provided for would not apply when it was a Mr. Big but would apply when it was an entirely innocent party. Unfortunately, he fails to recognise that a Mr. Big might be found innocent, or at least not found guilty, in certain circumstances. That does not necessarily mean that he is innocent. Therefore, rewarding him unduly by allowing him to produce witnesses who will assert that he was going to do this, that and the other, will not necessarily ease my anxieties.

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath

I hear what the hon. Gentleman says, but we must preserve the position whereby if somebody is innocent, and it seems that the forfeiture order should not properly have been made, the person should be compensated. That seems to be the purpose of the Government's rewriting of the clause. I see the Minister nodding assent. The hon. Member for Glasgow, Pollok talked about betting coups and people wandering around Glasgow claiming that horses were bound to win. I seem to remember, without intruding too much on a private grief, that there was a betting coup in relation to certain events that happened not a huge length of time ago in the Palace of Westminster. Certain hon. Members, who represent the relevant part of Scotland, were thought to have been betting on a certainty. I seem to remember that the hon. Member for Motherwell and Wishaw (Mr. Roy) had to resign a position as a result of accepting that he had bet on an outcome that he was influencing.

Mr. Davidson rose—

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. Before we go too far down that road, the Committee should return to the effect of the amendments under consideration. With regard to the comments of the hon. Member for Glasgow, Pollok, I want to point out that when I worked in and around Pollok, turf accountants offices were not to be seen because they were unlawful in those days.

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath

In the light of your ruling, Mr. McWilliam, I shall not pursue the matter. The Minister has helpfully rewritten the clause and we shall accept Government amendment No. 335. We ask him, however, to reconsider whether it may be better to import a concept of reasonableness into the provision later in our proceedings.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Given the present company, I wish to say that my hon. Friend the Minister is wonderful, as is our Whip, who has treated us harshly, yet fairly.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. I hope that the hon. Gentleman is not referring to anyone who is sitting beyond the Bar in the Room. That would be out of order.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Is there someone beyond the Bar? I had not noticed.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

That is good. ''Mr. Holiday'' has just responded to me.

Will the Minister clarify the juxtaposition of clause 300(5)(b), under which a fine or penalty or compensation is to be paid by the police authority, with clause 299, under which any money seized or forfeited goes into the Scottish Consolidated Fund? That is a trifle unfair and unbalanced, given that the Scottish Consolidated Fund receives all the gains, yet the penalties fall on the individual police force.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. The hon. Gentleman should raise such matters under the clause stand part debate, not when the Committee is discussing an amendment.

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

I want to touch on two matters, the first of which is in respect of the comments of the hon.

Member for Wellingborough (Mr. Stinchcombe). He is right that the amendment should read:

''such that the court or sheriff considers it reasonable''.

The word ''them'' under the amendment was probably a result of my drafting it late in the evening. I apologise and I am grateful to the hon. Gentleman for picking up the error.

I have a query about the Government's amendment. The Minister said that it would usually be the case that, when the cash was detained for more than 48 hours and was not in an interest-bearing account, compensation would be paid. It is right that there is a residual court discretion not to pay it. That is clearly implicit in the word ''may'', not in the word ''must''. The hon. Gentleman is looking a little quizzical, so I shall read out the relevant part. The amendment states:

''If, for any period after the initial detention of the cash for 48 hours, the cash was not held in an interest-bearing account while detained, the court or sheriff may order an amount of compensation to be paid to the applicant.''

The only inference that can be drawn from that form of words is that the Minister is envisaging circumstances in which the court should have the discretion not to award interest, even though the cash had not been placed in an interest-bearing account and the person was entitled, all along, to that money. I am interested why such a form of words is used. If the Minister wishes, in the ordinary course of events, for the money always to be paid and assessed under proposed subsection (1B), surely the word ''must'' should be used. If he has a cogent reason why the court should have the discretion not to award interest in those circumstances, I should be grateful to hear it. However, he has not touched on such a reason so far. I doubt if one has crossed his mind. I suggest respectfully to him that the amendment would be better drafted if ''must'' replaced ''may''.

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

It is possible that the hon. Gentleman has a point. We are discussing rare occurrences. As he is aware, there is a requirement under the Bill that the money be paid into an interest-bearing bank account. There will only be certain circumstances in which that will not happen. Therefore, interest will have accrued and the money will be repaid with that interest.

The word ''may'' is used if, for whatever reason, the money is not placed in an interest-bearing bank account. I cannot think of such circumstances. I have not discussed situations in which the money is not paid into an interest-bearing bank account, yet it is subsequently returned because it is not forfeit, and interest should not apply. However, such situations might arise, and perhaps we should address that possibility.

Photo of Stephen Hesford Stephen Hesford Llafur, Wirral West

Would it not be possible for the court to come to the view that the applicant is at fault? The money might not have found its way into the interest-bearing account because the applicant did not respond or take part at the relevant

time. In such circumstances, the applicant would be partly culpable.

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

Those kinds of thoughts are going around inside my head. The main reason why money might not be paid into such an account is because it is required for evidential purposes, but, subsequently, the person from whom the money was removed might not be found to be blameworthy. I wish to reflect upon the matter, so that I can ensure that I can satisfy the Committee that the word ''may'' is appropriate, and so that, if that word is inappropriate, I can examine whether it ought to be changed.

There might be circumstances in which the court should not pay the interest. The money might not have been paid into an interest-bearing bank account, and—as my hon. Friend the Member for Wirral, West (Stephen Hesford) has pointed out—that might not be entirely the fault of the constable or the customs officer. The applicant might be at fault—although, at the moment, I cannot think why that might be the case.

Photo of Ian Lucas Ian Lucas Llafur, Wrecsam

Clause 295(1), which deals with interest, might be of assistance. That subsection includes the statement that interest ''is to be added'' on forfeiture or release. That might address the concerns that have been raised by Opposition Members.

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

I am not sure that my hon. Friend is right about that. Clause 295(1) covers situations in which the money has been paid into the account and the interest has accrued. It provides that when the money is returned, the interest should be paid, along with the original capital amount. We are now discussing situations in which, for whatever reason, the money is not paid into the account within the required 48 hours, and I am not dead sure that that is covered by clause 295(1).

There might be situations in which the court might want to assert that it was not the fault of the customs officer or the constable that the money was not paid into the account. The court might wish to assert that the person from whom the money was seized was at fault, because they caused a delay in the payment of the money into the interest-bearing bank account, therefore they should not be compensated for the loss of that interest.

If such situations might arise, the word ''may'' is appropriate. If such situations will not arise, we ought to consider using the word ''must'', and I give an assurance so to do.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

I am in favour of discretion for the court in such circumstances. People are not always found to be either innocent or guilty. Under Scottish law, a verdict of not proven is possible, in which case the court might be uncertain about what position to take. Therefore, it would be better to leave the court with some discretion.

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

As I have indicated, I wish to reflect upon the matter and to comment on it later.

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

I agree with the Minister that it is important to examine whether circumstances might arise in which a court, properly exercising its discretion, would decide to deny payment of interest

because the person from whom the money was seized had committed some kind of misfeasance or misconduct. However, as the argument has developed, I am bound to tell the Minister that I find it difficult to see the exact circumstances in which that could happen. On the face of it, the money would have been taken and the purely administrative act of paying money into the account would not have been properly done. It is difficult to know how the blame could lie on the person concerned.

One could widen the argument and ask whether the person attracted the investigation on to themselves. However, that is dangerous ground when dealing with a situation in which there is an administrative requirement to carry out a simple action.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department 3:15, 10 Ionawr 2002

I agree with the hon. Gentleman. The requirement of the money as evidence would be the main reason why it would not be paid into the account. I am thinking of circumstances in which a person was aware of a fact that was not disclosed that required the money to be held as evidence rather than paid into the account. If it became apparent subsequently that the matter could have been cleared up and the money paid into the account, the failure to do that would be the person's fault. However, I agree with the hon. Gentleman, and I cannot think of a situation other than that.

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

I am much obliged to the Minister and I am grateful for his undertaking to examine the matter further.

Amendment agreed to.

Amendment made: No. 336, in page 173, line 41, leave out '297(5)' and insert '[Victims]'.—[Mr. Bob Ainsworth.]

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

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

I will not repeat the point that I made because I am sure that the Minister understood it and was preparing a response. I was perhaps unduly and gratuitously constructive earlier, so I will clarify my position that the Minister is too soft and the Whip too hard.

I was impressed by your perspicacity, Mr. McWilliam, at spotting the growth of my one of my colleagues' facial hair. I had considered making a similar point about the fact that the hon. Member for Henley (Mr. Johnson) has had a haircut. This morning, he entered the Room freshly cut and combed. However, since then he has found a hedge to be dragged through backwards and his hair—such as it is—has regained its usual unruly state.

Photo of David Wilshire David Wilshire Ceidwadwyr, Spelthorne

There is a bit of jealousy on that side.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Yes, indeed.

Over the Christmas and new year period—this is immediately relevant to our debate—I went to see ''The Lord of the Rings''. I do not know if you have seen the film, Mr. McWilliam, but if you see it, I suggest that you look closely at the hobbits and decide

whether they remind you of the hon. Member for Henley. I think that there is a very close similarity.

I ask the Minister about the imbalance between where the gains from seizures go and where the penalties for any mistakes come from. The structure runs the risk of inhibiting the police authority from encouraging officers to take action lest they discover that a number of cases go against them, causing considerable expense. In such circumstances, the police would not have the countervailing balance of sums fed elsewhere into the system on which to call automatically. I hope that money that entered the Scottish Consolidated Fund under the Bill would be redirected for such purposes, but there is no guarantee of that.

Will the Minister clarify that point? I have spoken about Scotland, but the same point applies to all police forces in England and Wales.

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath

It is a genuine pleasure to be able to agree with one of the hon. Gentleman's points. He waxed lyrical about the facial appearance of two members of the Committee, but while he was away getting bronzed before Christmas—I think that he was fortunate enough to be visiting warmer climes in Africa on parliamentary business—Conservative Members made an almost identical point to the one that he made about police authorities. He may not have appreciated that. We did not bother to table the same amendment for the matching Scottish provision, because we felt that we had already discussed the subject.

The hon. Gentleman may well agree—I hope that the Minister will respond to the point—that, when compensation is awarded against police authorities, a problem arises that could as easily have an adverse affect on his authority in Scotland as it could on mine in Surrey. When compensation is paid from a police authority budget, whether north or south of the border, the sum is not necessarily made up from central funds. Many of us who are concerned about the inadequate funding of our police authorities are concerned that extra expenditure may be taken from them.

When we debated the matching provision for England and Wales, I made the point that it is unfortunate that in all other provisions in the Bill for cases of misfeasance by those in public office, compensation is taken from central funds. The only case in which it comes from a defined budget is when it comes out of police authority funds. That is a problem, and I hope that the Government will think carefully about it. I seem to remember that the matter was one of many that the Minister said he was prepared to think about again—although I am not sure, as he said that about many subjects. Even if he did not, I urge him to do so.

We in Surrey have had grave problems with unexpected costs that have fallen on police authorities. The biggest bone of contention was the exceptional costs that fell on Surrey police when Senator Pinochet was under house arrest. That caused a great deal of local media interest and led to many meetings between Surrey MPs and Ministers,

including the right hon. Member for Norwich, South (Mr. Clarke), who was then a Home Office Minister. The Home Secretary promised on television that Surrey police would not lose out and that Surrey council tax payers would not face any additional burden. Despite that public promise, which I heard myself, Surrey police have been left out of pocket. Only £700,000 was reimbursed, although the total cost, as the chief constable has repeatedly made clear, was £1.1 million.

That shortfall is germane to our concern about extra, uncompensated costs that fall on police authorities. That is particularly the case as lots of other things will come out of central funds under the Bill. I am glad that the hon. Member for Glasgow, Pollok recognises that inconsistency. I hope that the Minister will take the matter further.

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

I have been distracted into trying to fathom how, other than by his unruly hair, the hon. Member for Henley resembles a hobbit. It is certainly not in size.

Photo of Boris Johnson Boris Johnson Ceidwadwyr, Henley

I hesitate to intervene on the Minister. I am at a loss to understand what either hobbits or my hairstyle have to do with the important amendments under discussion. If someone could explain that to me, I should be most grateful.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

I totally agree with the hon. Gentleman: that troubled me, too. While we are on the subject, I have not seen the ''The Lord of the Rings''. My only contact with it was when I worked on an electronic telephone switch called a ''Gandalf'' years ago—although my grandson has plans for me this weekend.

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

Nothing at all, is the answer to the hon. Gentleman's admonishment. It was just too tempting an opportunity to get him to speak, as my hon. Friend the Member for Glasgow, Pollok tried and failed to do. I am pleased that my plan worked and that we heard that little outburst.

I freely accept that my memory is not all that I could wish it, but my recollection of our previous conversation on the subject is not the same as that of the hon. Member for Surrey Heath: it is quite the reverse, although I stand to be corrected. The Opposition have backed away from the position that they held in our earlier debate. When my hon. Friend the Member for Glasgow, Pollok puts it like that, it appears that there is an imbalance, but I hope that he and Opposition Members will reflect on the matter. If we want accountability for the way in which laws are enacted, compensation for cases in which they are not properly applied must be connected to some accountability. It is dangerous to remove that accountability entirely.

We should not remove from local police forces the burden of compensation for their actions. I am surprised if that is Opposition policy. Provisions are in place for compensation in exceptional circumstances—that is exceptional expenditure incurred by a police authority. It would be detrimental for central funds to accept the

consequences of compensation claims made against police forces. Equally, I am not sure that hon. Members have thought through the idea of telling Customs and Excise or police authorities, ''What you get, you keep.'' Our courts would not be properly used if we went down that route.

The Bill provides that money is paid into the Consolidated Fund, but that up to half is subsequently transferred into the asset recovery fund. That money is paid to develop further the policies and structures that we have discussed and to compensate the communities that suffer most from the activities of organised crime, drug trafficking and so forth. That is an appropriate way to achieve accountability for any misuse of powers, and to ensure that the powers that we give to the police are not misused through any direct gain from the pursuit of the proceeds of crime by a particular force.

Photo of David Wilshire David Wilshire Ceidwadwyr, Spelthorne

I am grateful to be able to join in a discussion on the differences of opinion among Labour Members, but I am prompted to tell the Minister of my sympathy for his view on accountability. It makes sense to keep pressure on an individual police authority to conduct its business in such a way as to avoid compensation. However, if he is to pursue that argument, he should apply the same test to Customs and Excise. It is not simply that the hon. Member for Glasgow, Pollock is wrong and that the responsibility should stay with the police. The Minister should go on to say, ''Perhaps we should review the situation when a Customs and Excise officer is involved.'' From my limited knowledge of Customs and Excise arrangements, I readily accept that officers regard themselves as separate from the Inland Revenue and the general Exchequer—if that is the right phrase. Under most circumstances, if one said that their money is all part of the global tax take, they would answer that they are officers of the Crown and that they are collecting separate money. They may wish to sustain the argument that by penalising the Customs and Excise funds centrally, pressure is exerted on them because they are accountable for the money that they collect and pay out.

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

I am not aware that Customs and Excise gets to keep all the moneys that it seizes under its powers. Subsection (4) states:

''If the cash was seized by a customs officer, the compensation is to be paid by the Commissioners of Customs and Excise.''

We are already doing what the hon. Gentleman asks.

Photo of David Wilshire David Wilshire Ceidwadwyr, Spelthorne

I accept the Minister's answer up to a point, but there is a distinction involved in the case of a global fund held by Customs and Excise, which is a national matter and a huge sum. With that huge sum and a vast array of Customs officers, it is difficult to pinpoint accountability. In contrast, with the exception of the two big police services—the Metropolitan police and, probably, Strathclyde police, although I am not familiar with that force—there is a clear line of accountability to the funds of a smallish police authority and individual officers and members of the authority.

If the Minister wants to sustain his argument about genuine accountability in individual police forces, he

should examine the process of accounting in Customs and Excise. The commissioners of Customs and Excise will always regard themselves as collectors of customs duties, not merely collectors of tax money for the Treasury. At the end of the process, the commissioners hand over to the Treasury what they, in my experience of Customs officers, argue is their money. However, I do not believe that that would necessarily meet the Minister's requirement for genuine accountability.

Perhaps the Minister should speak to the commissioners of Customs and Excise and examine how they budget and divide up their accounting arrangements and whether it might be possible to table an amendment to provide that an individual collector in Customs and Excise is the person responsible for the area in which the incident happens and that all individual collectors of Customs and Excise must have individual budgets. Perhaps the way to ensure accountability is to provide that the money should come from the budget of the collector responsible. When that collector's performance and budget are reviewed at the end of the year, he will have much more pressure on him to explain what went wrong and, therefore, not to do it again.

Perhaps the Minister could accept the suggestion made by the hon. Member for Glasgow, Pollok to take the pressure off the police service. That might be one way of dealing with the matter. Another might be to find some means of putting additional pressure on Customs and Excise. My conclusion is that the one unacceptable proposal is to leave the status quo.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok 3:30, 10 Ionawr 2002

I want to respond to some of the Minister's points. I was present to hear the argument that the hon. Member for Surrey Heath, among others, advanced previously, and I believe that this matter is substantially different.

I accept the Minister's point about accountability, but he seems to be in danger of introducing one-sided accountability. The police service is to be held accountable and will have to pay for any mistakes but will receive no reward, benefit or recognition of any gains or achievements. The accountability is purely negative.

When a police force—they are generally under financial pressure—considers its overall strategy, the mechanism that the Minister proposes is likely to drive it into an ultra-cautious stance that presents virtually no possibility of penalty. I have always taken the view that the police should be much more active than they would be in taking such a safe, secure, cautious position.

I accept, and I believe that it is in the spirit of what the Government intend we should accept, that mistakes will be honestly made. I do not want people to proceed only on the basis of being absolutely certain in every case. I want them to proceed on the basis of having reasonable grounds for believing that they can achieve a result, although not willy-nilly. However, such a position involves an acceptance that mistakes will be made that might involve compensation.

The danger is that authorities will, in determining their strategy, have to take into account the fact that the more active they are, the more expense is likely to be involved. In Scotland, for example, lots of drugs come up the motorway from England. When they cross the border, they enter the area of Dumfries and Galloway police. Subsequently, they enter the area of Strathclyde police. It is entirely possible that Dumfries and Galloway, an extremely small force with a very small budget, will be inhibited from trying to arrest couriers in their area lest they become liable for any penalties. They may pass information on to Strathclyde for them to catch people a bit further up the road, so that Strathclyde police will risk the penalty, on the basis that they have a bigger budget, and if the operation goes wrong they can afford to pay the price.

This is a serious point. I want the Bill to work, and I do not want the police to be given carte blanche, but if we are to have accountability, it must be balanced. If there is going to be blame and pain, there has to be some prospect of gain and balance, too. If the Minister cannot give me the assurances that I want today, I hope that he will undertake to consider how our shared objectives can be achieved.

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

My hon. Friend is being a little unfair by saying that there will be no gain and it will all be potential pain. He has exaggerated the circumstances by suggesting that the police authority has no interest in ensuring the recovery of assets, 50 per cent. of which will wind up in the asset recovery fund. Police authorities throughout the country will have input into how that money will be used. It will benefit the communities about which they are most worried.

The police will benefit because, for the purposes of tackling crime, the proceeds of crime will be confiscated. The asset recovery fund may contain a credible amount. The police can make suggestions about how it is spent to make their jobs easier and the lives of those whom they protect better. It is not true that there will be no gain. There will be no direct gain. We are not saying to an individual police authority or to Customs and Excise, ''What you get, you keep,'' or that they can have 50 per cent. of what they get. If we did that, we would be providing a fairly extravagant and potentially perverse incentive in respect of how the Bill can be used, and that would worry me greatly.

We must consider the deterrent effect. We are discussing compensating someone—in the majority of cases—at the rate of interest because the constable or Customs officer has failed to pay the money that he confiscated into an interest-bearing bank account within 48 hours. That would apply too in the most exceptional circumstances in which we have taken money from someone believing it to be the proceeds of crime or intended for use in crime, but that turns out to be the property of a legitimate business man on the way to make a deal from which he would profit. We would, in effect, compensate him for the loss of that profit.

Exceptional circumstances will apply on rare occasions. In most cases, there will be only relatively small amounts when the interest has not been paid.

There will not be many circumstances in which it is not possible for the authorities to pay in the money within 48 hours. We are discussing cash and claimable items, and in the majority of circumstances the authorities should be able to pay the money into the interest-bearing bank account and there will be no compensation to be paid. My hon. Friend has exaggerated the downside—the deterrent effect—of the provision. We are giving powers to both Customs and police officers that they will welcome. They will be willing to use them and such powers will subsequently benefit the communities that those officers protect.

Question put and agreed to.

Clause 300, as amended, ordered to stand part of the Bill.