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

I want to make some observations and to express my worry about the clause in two major respects—first, on the issue of fines and the cost of enforcement and, secondly, on contracting out. I readily acknowledge the logic that a person, having been subjected to a financial penalty on conviction, should bear the costs of enforcing such a financial penalty. Such costs should, of course, fall on the payer and not the state.

Nevertheless, I have some concerns about an individual’s ability to pay. Clearly, significant costs are attached to the issue of distress warrants under which goods or money can be seized. There will be a fee for the registration of the outstanding sum on the register of judgment and orders, for taking enforcement proceedings in the civil courts and, indeed, in the making of a clamping order in respect of an offender’s vehicle.

Has any modelling been done? If so, will the Minister give guidance on the likely sums that a convicted person would be liable to pay and include some analysis of the predicted recovery level of such cumulative charges? The state should not be thwarted in pursuing a criminal according to law, but is there not a risk of heaping debt on debt, and making it increasingly unlikely that such financial penalties and the attendant enforcement costs will not be paid? Is there not a risk that some individuals will not be able to break free of an ever-decreasing downward spiral?

Of course, individual financial circumstances change over time, and I therefore ask the Minister to advise the Committee on how deterioration in an individual’s finances might be reflected within the regime.

Subsection (2) provides the Lord Chancellor with the clear ability to contract out the functions of fines officers. Currently, some 2,000 people are employed by Her Majesty’s Courts and Tribunals Service in the enforcement of criminal fines and fixed penalty notices. The last reported annual figures show that they have increased fine collection by 14.5%. That has been achieved by chasing down the most difficult cases. The apprehension is that private companies are more likely to chase fixed penalty notices for things such as speeding fines, rather than for other criminal offences for which fines are harder to collect.

Would it not be folly to ignore the recent experience of the contracting out of the translators’ service? As my right hon. Friend the Member for Barking (Margaret Hodge), the Chair of the Public Accounts Committee, said on 14 December 2012,

“Interpretation services are vital for ensuring fair access to justice. Yet when the Ministry of Justice set out to establish a new centralised system for supplying interpreters to the justice system, almost everything that could go wrong did go wrong. The Ministry awarded the contract to a company, ALS, that was clearly incapable of delivering. The Ministry had been warned that ALS was too small to shoulder a contract worth more than £1 million, but went ahead and handed them an annual £42 million contract covering the whole country.

The Ministry did not understand its own basic requirements, such as how many interpreters it needed or in what languages. And it ignored the views of interpreters, who were clear that they had serious concerns about the contract and were adamant that they would not work for ALS. As a result, the company was able to meet only 58% of bookings against a target of 98%. The result was total chaos. Despite this, the Ministry has only penalised the supplier a risible £2,200. This is an object-lesson in how not to contract out a public service.”

The Committee concluded that the Ministry failed to undertake proper due diligence of ALS’s winning bid. Sadly, the Ministry was unable to quantify the additional cost of the failure.

I would like to hear from the Minister how he can guarantee a better deal for the taxpayer if contracting out provisions are taken up. Will the existing provider be able bid for the work? My fear is that, if that does not happen, we run the risk of losing the success and recovery rates that are currently enjoyed, together with the expertise that has been built up over many years, as currently exists within our own HM Courts and Tribunals Service staff.

If the service is contracted out, in whole or in part, can the Minister guarantee that any such tendering process will include a robust due diligence process, so that the experience of the translators’ service debacle is not repeated and that the penalty for failure within any such contract will fit the crime?

I am pleased to follow the hon. Member for Middlesbrough. The clause is important since with penalties from the courts we often concentrate on the more serious ones that grab our attention. However, financial penalties make up 65% of all penalties imposed by criminal courts. It is important to get the provision right to ensure effective enforcement of financial penalties.

The hon. Gentleman spoke of the success of recovery of fines. There has been increasing success since 2008-09 when the rate for payment of fines was 84.7%. In 2010-11 the payment rate was 93.2%. That is relevant. However, it is not just about fines being paid; I want to draw into the debate the issue of compensation orders being paid promptly. The responsibility is on the offender to make payment, so I welcome the shifting of the burden in the costs of enforcement. We have to reflect that there is a victim, particularly in relation to compensation. We have to consider how the victim is dealt with in terms of prompt and effective payment of compensation.

Notwithstanding the relative success in recovery rates, some £600 million is outstanding from fines and other awards over a number of years. That must make us pause to ask whether we can do more to ensure that, overall, a lesser amount is outstanding from orders of the court, and what we need to do about that.

The Minister may be able to help, but I have been unable to glean information on how much compensation is currently outstanding, both cumulatively and year on  year, from those awards. That is important, and it is the subject of my remarks. My understanding is that £413 million of fines and other awards was ordered in 2010-11, £282 million of which has been collected. I am not aware of the breakdown for compensation, because the figure also includes fixed penalty notices and other awards.

Costs are also a burden on the taxpayer. The collection of sometimes relatively small amounts for both fines and compensation can be disproportionate to the amount recovered, which imposes a burden on the state. We must consider how that burden might be shifted on to offenders. I particularly welcome an important provision in the clause that explicitly allows powers and practical arrangements to ensure that the costs of recovery, particularly where there is non-compliance, are shifted on to the offender. Indeed, that is the case in many recoveries of civil debt, as the hon. Member for Middlesbrough knows all too well.

When a local authority tries to recover council tax arrears, the burden of late payment shifts to the person who is paying late. Private sector contractors are routinely involved in recovering payments for local authorities, interestingly with different rates of success. Private companies help to ensure not only payment but prompt payment, which, ultimately, is to everyone’s advantage.

I have not previously declared my interest as a defence solicitor dealing with offenders of limited means. Enforcement must be proportionate and reflect people’s means. No doubt the court will take that into account when considering the level of a fine or other award and the time to pay. Every agency involved in enforcement must have a sense of proportionality.

I welcome the Government’s intention to ensure that how we recover and enforce debt that is to be paid to society is about not only financial penalties but restorative justice or other assets. We must have a broader view when trying to ensure that amends are made.

Compensation is important, because my experience of magistrates courts is that the amount ordered is a contribution to compensation, rather than full compensation for the victim, which often has to happen in other ways. I particularly welcome that under the Legal Aid, Sentencing and Punishment of Offenders Act 2012, we now have a statutory duty, whenever an offender comes before the court, to consider compensation. There was some interest among the Opposition in pushing for that provision and clause 23 is aligned with it. I am sure both sides of the Committee are on the side of trying to ensure that compensation happens in all its forms as often as possible.

In magistrates courts, some 63% of compensation orders involve amounts of less than £100. Such orders, given the limited means of offenders, are routinely made over a period of time, and it might be £5 a week, particularly for someone who is on benefits. There is then the question of trying to ensure compliance with that £5, which might not come one week—there might be £1, or something else. Who gets that compensation? The compensation is passed on to the victim, who might be a victim of a particularly serious assault. The payment, which might be weekly or monthly, is a few pounds. From my time considering this policy area when I was in opposition, I know victims are victimised through the whole enforcement process. They get pounds or pennies in compensation and their victimisation can  last a long time. The Minister described how it can take a long time to get compensation—not just weeks or months, but years. Victims see a derisory amount for what they have experienced coming through to them each month.

I am listening carefully to what the hon. Gentleman says, but perhaps the answer to the problem is what Louise Casey suggested in her report on the victims of crime. She suggested the establishment of a victims fund so that there would not be delays or an ongoing financial relationship between perpetrator and victim. Many victims find that relationship offensive. A victims fund is a better solution.

I am sure the hon. Lady will welcome the fact that the Government are putting more money into a victims fund, not least through the Prisoners’ Earnings Act 1996, which was just lying on the statute book and we implemented. Some £800,000 has now come from prisoners directly into the victims fund, providing a pot. I know that it is going to victims services much more directly, and we may need to look creatively at how it can go to victims directly. Victim surcharges are being extended to all levels of serious offending, so that offenders are increasingly paying for their crime. However, I take the hon. Lady’s point about the victims fund, which could be used more fully and directly. I will come to that point shortly.

We used to have something called a victims fund: the Criminal Injuries Compensation Authority. Continually lifting the bar and excluding people from the process defeats the object that the hon. Gentleman is trying to achieve. If we could revisit that, we would not have to reinvent the wheel. We could go back to people being paid out under that system, and the continuing obligation of the offender to pay would not involve the victim at all.

I have tried not to go into the whole debate around criminal injuries compensation; I was making a point in support of the Government’s amendments. One of the problems was that that scheme was not sustainable, and many victims were getting a small amount over a long period, and the victimisation goes on.

It is important that we see compensation as a priority and that it is paid to the victim as soon as possible, preferably in full. The clause provides an opportunity to engage, where appropriate, with the private sector in collection. It is important to follow the route of local government and ensure that there is an incentive for all parties to ensure prompt payment. The present system does not properly do so. The burden then shifts to the offender to make prompt payment. I urge the Government to focus on compensation orders. That is where it matters most for victims. The incentive and the burden, and the expense of late payments for compensation, will fall on the offender. It will not be surprising if compensation does not come in dribs and drabs, but perhaps more fully, when offenders see that their compensation orders for less than £100 are rising without their being able to do much about it. That will particularly benefit victims.

I urge the Minister to go further, as we suggested in opposition, and engage with the private sector, perhaps credit agencies, to make up-front payments that go directly to victims. The order would be made at court and within a week the full payment would go into the hands of the victim. The business of enforcing the debt would fall on the offender and the agency. There would be an incentive to pay it as quickly as possible to avoid interest rate charges and enforcement costs.

I am really interested in what the hon. Gentleman is suggesting, given the experience of student loans and the green deal. Does he have any information on how many private credit companies are interested in the proposal? What would be in it for them?

I am taking the Committee away from the scope of the clause and mooting a future way of approaching things. The bottom line is that we are not talking about students; we are talking about offenders who need to pay their due. We are also talking about victims, who almost routinely do not receive full payment for the crime committed against them, but only a contribution. We have the motivation to create more creative opportunities to ensure that victims receive full payment. We must ensure that fines and compensation are paid so that the burden does not fall on the taxpayer but where it should—on the offender.

I very much want to speak about the clause, as we have serious reservations about it, particularly proposed section 36A, which is headed:

“All functions of fines officers may be contracted-out”.

The clause provides for the contracting out of the functions of fines officers, and for the costs of enforcement to be recovered from the debtor liable for the initial financial penalty. We have serious reservations about those provisions in light of the wider context of enforcement practices, which we have not yet discussed, and the status and progress of plans for regulation.

I am pleased to have the opportunity to debate these issues in the light of the Government’s recently—very recently—announced proposals on bailiff reform. Due to the considerable delay in the Government’s announcement on bailiff action, that luxury was not available to hon. Members on Second Reading, nor to noble Lords during the entire passage of the Bill in the other place. Why has it taken from May until January for the Government to respond to their consultation on bailiff regulation?

The consultation response document is 60 pages long. After eight months of procrastination, a clause was published halfway through the progress of the Bill. The clause will implement progress that was largely designed and detailed by the previous Government. It is disappointing that the Government did not show a resolve to tackle the issue more urgently, or afford both Houses the courtesy of properly scrutinising their proposals on the regulation of bailiffs. The Minister looks confused.

I am only confused because we are about to debate the regulation of bailiffs under clause 26. It is an important issue, and I am happy to debate it  with the hon. Lady. I look puzzled because I am slightly confused about why she is trying to debate it under clause 23.

We think it is relevant to clause 23. The Government’s proposals to outsource the collection of fines will be introduced before regulation can be implemented. That is not a wise way to proceed, and I will explain why. We all know, from our constituency caseloads, that people are concerned about the behaviour of some agents operating in the bailiff industry. That should not be news to Members on either side of the Committee. The Government’s consultation, and the previous Government’s legislation, the Tribunals, Courts and Enforcement Act 2007, which the Government plan to enact, were undertaken in response to a real and pressing problem.

We know that the people involved are offenders, but incidents of intimidation, threats, aggressive behaviour, excessive fee charging and misrepresentation of powers have been well reported. In many cases, vulnerable people are inexcusably subjected to those distressing ordeals. I will not labour the point because Members already have a view, but known cases include children on their own in a house told that their possessions will be taken away; parents told that their children will be taken away; fees hiked to indefensible and unaffordable levels; and threatening messages sent at all times of the day and throughout the night.

It is important to put on record that such behaviour is committed by a minority of people who do great damage to the rest of the profession’s reputation. We understand that bailiffs perform particularly difficult and necessary work, and those who undertake that task professionally and responsibly should not be tarred by the actions of untrustworthy colleagues, but the untrustworthy few punch above their status in the disruption and distress that they cause individuals.

Our concern about the clause is with regard to the seriousness of that irresponsible behaviour and, as I said, the Government’s timing. They have brought forward proposals to address problematic bailiff activity, with the aim of improving safeguards that apply to the industry, and that is welcome. The implementation of the provisions in part 3 of the Tribunals, Courts and Enforcement Act, as introduced by the previous Labour Government, are welcome.

I touched on the fact that the Government have operated somewhat backwards and introduced their policy long after they introduced the Bill that will help to host it. We question whether the Government have also acted in an untimely manner with the proposed changes coming too early in comparison with the plans in their consultation response. We do not want individuals unprotected before the response to the consultation is implemented.

As it stands, the Government intend to offer new powers to private bailiffs under the clause, which will vastly open up the work of enforcing court orders to private operators before the enactment of any of the proposed improvements that the Government argue are so badly needed, and with which the Opposition agree. My main point is about timing. The Government’s intended safeguards to transform bailiff action are not yet in place, so no culture change has taken root. I put it  to the Minister that such a culture change will take a long time. No bad practitioners have been rooted out and, most importantly, no review has taken place from experience of how successful the reforms will be. There has been no time to address or identify shortfalls.

Key elements of the package need regulations before they can progress. The regulations have not been put before the House and they are not expected to be drafted until the summer. The clause includes the power for bailiffs to pass on their fees to the debtor, but the fee structure under the provision has not yet been finalised in legislation. Finalising it in regulations is included in the “next steps” section of the consultation response. We have too little information to be able to support this part of the Bill.

Courts Service enforcement staff currently have higher success rates than private providers. They exceeded all targets last year and increased fine collection rates by 14.5%, so the change is not one that the Government can believe the system needs so badly that it must be fast-tracked. Concerns about private practice also include the possibility of cherry-picking, whereby difficult cases are not dealt with. As a result, many high penalties, some required as compensation for victims, are not being secured. Equally, the contracting out of services is not something in which the current Ministry of Justice is particularly known for its success.

Will the Minister consider whether in light of the worrying practice that currently blights the enforcement industry, the expansion of further powers and available work should be withheld until a measurable, desirable transformation has been achieved, rather than ahead of a transformation that he hopes to achieve? The Government’s consultation was entitled “Transforming bailiff action”.

I raise those points to question whether we should not finish that job first and give ourselves time to check and honestly appraise our progress before moving to other reforms. I shall listen carefully to the Minister’s reply, but at the moment, we are not minded to agree that the clause should stand part of the Bill.

I am grateful to members of the Committee for their contributions to the debate. I emphasise again to the hon. Lady that the clause is not about enforcement action by bailiffs on the doorstep, but about the collection of fines and other sums by HMCTS staff, which are quite separate processes. I am sure that we will have a full debate on clause 26 regarding the point she makes.

When the fines are contracted out, who does the Minister think will be awarded these contracts? What industry does he think will be doing the work?

Let me put clause 23 in context. It enables the costs of collecting or pursuing unpaid fines to be recovered directly from the defaulting offender, and ensures that there are strong incentives for offenders to pay fines promptly. Ultimately, collection costs will be added directly to an offender’s fine if they fail to pay the fine to the agreed timetable and costs are incurred in pursuing payment. The costs do not apply to the  doorstepping enforcement activity undertaken by bailiffs on behalf of Her Majesty’s Courts and Tribunals Service, which are governed for separately.

Once a person has failed to pay their fine, much of the work that goes into pursuing that fine involves the fines officer undertaking labour-intensive processes; for example, sending letter reminders, tracing offenders, validating offenders’ information or arranging deductions from benefits or earnings. I am sure that the Committee will agree that it cannot be right that a proportion of offenders do not pay their criminal fines in a full or timely manner. That undermines the effectiveness of fines as a criminal punishment and costs the taxpayer millions of pounds each year to pursue. Equally, it cannot be right that the hard-working taxpayer should have to pick up the costs of pursuing unpaid fines.

I think two hon. Members asked about the actual numbers involved. In the financial year 2011-12, £314 million of fines and related awards were imposed in the criminal courts, and £279 million, not including confiscation orders, was collected. My hon. Friend the Member for Enfield, Southgate asked about the level of outstanding confiscation orders. In 2011-12, HMCTS collected more than £484 million from offenders, including confiscation orders, and in addition, £22.3 million in compensation has been paid to victims of crime, funded by criminals’ cash and assets recovered through confiscation orders.

The total value of outstanding impositions has indeed decreased, as hon. Members said, from £1.9 billion to £1.8 billion, but clearly more must be done to tackle that. The outstanding balance includes £1.2 billion of confiscation orders, of which HMCTS leads on the collection of £225 million—those cases are the ones that are directly relevant to the clause. The remainder are collected by the Serious Fraud Office and the CPS. HMCTS is working closely with other agencies to ensure that the confiscation orders are enforced.

Before I move on to general points, I want to address the question the hon. Member for Middlesbrough asked about the level of payments. Under the proposals in clause 23, the administrative costs will be fixed and proportionate to the actual cost of collection. It is too soon to say the level at which the collection costs will be set, but I repeat that no such costs will be added to a fine if the offender pays it on time. I think that is a point that will unite the Committee. It will not apply to those who pay as ordered, or who remain in contact with the court and comply with their payment plan. Fines officers are more than willing to set up plans for offenders who struggle to pay their fines. I take the point made about that by Opposition Members. The clause is squarely aimed at those who deliberately evade payment and try to play the system.

There was a question about how the provisions relate to the privatisation of compliance and enforcement action. The provisions form part of the overall future strategy for fines collection, but irrespective of the tendering exercise that the hon. Members for Darlington and for Middlesbrough were concerned about, fines account for a significant amount of the criminal courts’ business and are by far the largest disposal route from the criminal courts. Clearly, more improvements are needed to build on those we have made, which is what  the clause seeks to do. HMCTS is looking for innovative ways for the future, including forming a partnership with a commercial company to deliver fines collection services jointly.

The second part of the clause will clarify the law regarding the functions of magistrates courts fines officers. They are administrative staff who perform the crucial function of ensuring the timely collection of fines, including applying administrative sanctions to secure payment from a defaulter. Section 36 of and schedule 5 to the Courts Act 2003 permit the functions of court staff, including fines officers, to be performed under contracting-out arrangements. However, the prohibition on contracting out functions of a judicial nature under section 2 of the Act led to some ambiguity as to whether the totality of the functions of fines officers may be contracted out. Our view is that the functions of fines officers under schedule 5 are purely administrative and therefore able to be performed under contract.

Fines officers are, self-evidently, not judges. Their functions, including the exercise of any discretionary powers in respect of enforcement action, are simply designed to give full effect to the decisions of the court. By removing the ambiguity in the 2003 Act, the clause will make the position crystal clear.

We are currently exploring the potential for creating a partnership with a commercial company to build on the improvements already made in fines collection.

The Minister uses the word “partnership”, which sounds lovely, but the Bill does not say “partnership”, and that is the problem. It states:

“All functions of fines officers may be contracted-out”.

Partnership would be a different proposal, and it is a word that is often misused. Whether it would stand legally if used in the Bill, I am not quite sure, but it is slightly misleading to use the word in that context.

Clearly, the functions mentioned will be in partnership with the Courts Service, because they will be carried out on behalf of the Courts Service.

It is not a partnership.

It is a partnership. We can certainly argue about that.

For clarity, perhaps the right hon. Gentleman is looking at commissioning. He is not talking about forming a partnership with external enforcement agencies, but commissioning them.

I am talking about a partnership—[ Interruption. ] I think my hon. Friend the Member for Enfield, Southgate is right. The objection is to a partnership where one of the partners is in the private sector, which is an area of life that, interestingly, still has a degree of toxicity on the Opposition Benches, as the hon. Member for Middlesbrough said.

I must take the Minister up on that. There is no toxicity about the private sector on the Opposition Benches. We are happy to work with the private sector; I point to the example of prisons, being  run by the private sector. [Hon. Members: “What about G4S?”] I do not think we want to get into G4S, do we? It may well end up running the bailiff service—I really would not go there.

There is no toxicity. The point is not one of principle. We do not object to working alongside or commissioning from the private sector, but we object to widening opportunities for work for an industry that is not regulated at all at the moment, and where there have been serious concerns about malpractice. It is not a private-public issue.

The hon. Lady could have fooled me, given the comments of some of her hon. Friends.

The hon. Lady made a legitimate point about time scales. She wanted to know when the provisions on bailiff reform will be brought into force and when we will propose regulations. Our intention is to implement them in April 2014, so we will bring forward the necessary regulations well in advance of that date. I hope that we can make the regulations this summer, so that the House will be able to debate them, if it wishes, in the appropriate Committees well in advance of anything happening on the ground. I hope that satisfies the hon. Member for Darlington that there is no attempt to railroad something through without proper parliamentary scrutiny. There will be full and proper parliamentary scrutiny before anything happens in public.

The underlying point, which I conclude with, is that we need investment and new technology if we are to achieve our aspirations for improving the collection and enforcement services. That is the aim of this Government, as it would be for any sensible Government. The narrow purposes of the clause are precisely to do that, and I commend it to the House.

I listened carefully to what the Minister said, but on this occasion we are unpersuaded. We do not feel that enough thought has gone into the clause. The Minister said nothing about due diligence on the providers. The MOJ has not been fantastic at due diligence, particularly in regard to interpreters services. He said nothing about the length, transparency or cost of the contract. At the moment, providers will not be subject to freedom of information requests. For all those reasons, we cannot support the clause.

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

The Committee divided: Ayes 10, Noes 7.

Question accordingly agreed to.

Clause 23 ordered to stand part of the Bill.