I beg to move amendment 94, in schedule 16, page 274, line 27, at end insert—

‘Sentencing guidelines for DPAs

4A (1) The Sentencing Council must produce a guideline on the financial penalties and remedial measures appropriate for a DPA.

(2) The Coroners and Justice Act 2009 is amended as follows—

(a) at the end of section 120(1) insert “and corporate bodies, partnerships and unincorporated associations who have been charged with an offence but whose prosecution has been deferred under Schedule 16 to the Crime and Courts Act 2013”

(3) Where the Council has prepared guidelines under subsection (1), it must publish them as draft guidelines.

(4) The Council must consult the following persons about the draft guidelines—

(a) the Secretary of State;

(b) such persons as the Secretary of State may direct;

(c) such other persons as the Council considers appropriate.

(5) Before the guideline is permitted to come into effect, it shall be laid before Parliament, which shall have the opportunity of debating it.

4B (1) If the guideline is amended or replaced, the Sentencing Council must publish the new guideline as a draft guideline.

(2) The Sentencing Council must consult the following persons about the new guideline—

(a) the Secretary of State;

(b) such persons as the Secretary of State may direct;

(c) such other persons as the designated prosecutors consider appropriate.’.

With this it will be convenient to discuss amendment 95, in schedule 16, page 275, line 9, at end insert—

‘(6) A DPA must not contain a term granting a blanket indemnity for prosecution for undisclosed criminal acts committed in the past.

(7) A DPA must have regard to the DPA guideline issued by the Sentencing Council.’.

It might be helpful for colleagues if I briefly explain what a deferred prosecution agreement is. A DPA is an agreement between a prosecutor and an organisation facing prosecution for an alleged economic or financial offence. The prosecutor agrees to institute, but defer, criminal proceedings against the organisation—normally, we are talking about big companies here. In return, the organisation agrees to comply with a set range of terms and conditions, such as paying a financial penalty; compensating victims; disgorging—a great phrase—any profits made from the alleged offence; or making changes to its behaviour, policies or employee training. A DPA includes an expiry date on which it ceases to have effect. If the company breaches its conditions, the DPA is terminated and it will then be prosecuted. DPAs will apply only to financial and economic crime and to organisations, not to individuals. They are being adopted because it is currently very difficult to prosecute for that sort of crime, and even when a case can be brought forward, it takes a very long time and costs an awful lot of money to do so.

Amendment 94 provides for the Sentencing Council to publish guidelines on what penalties and remedial measures are appropriate for different levels of offence. Amendment 95 ensures that a DPA cannot include blanket indemnity for a company’s past crimes, including ones that have not even been disclosed. The amendments deal with minor changes and propose some valuable improvements that the provision would benefit from.

Schedule 16 provides for the importation of deferred prosecution agreements from the United States, as a tool for dealing with corporate economic and financial crime. The rationale is pretty clear. At present, prosecution of serious cases is difficult and costs an inordinate amount of time and money. The hope that the Government have for DPAs is that their use might allow for swifter resolution, and importantly, that they might bolster the aim of changing behaviour. The new system, however, means a substantial shift in practice, and for that reason, it is worthy of debate in Committee. It is incredibly important, not least for public confidence, that we tread carefully and get this right. I know that the Minister will agree with that.

Amendment 94 provides for the Sentencing Council to produce guidelines on the penalties and remedial measures appropriate for inclusion in a deferred prosecution agreement. This is not a new idea. In fact, it is something on which we and the Government used to agree. The majority of the process for agreeing a DPA will take place behind closed doors. Two of the main concerns raised about the proposals are that the public might believe companies are being allowed to buy their way out of trouble, or that companies might not be incentivised to enter into such an agreement. DPAs deal with criminal behaviour, so consistency and clarity in penalties is important. Transparency in how penalties are determined will encourage public confidence and ensure that the system is well understood and predictable and that it has the support of companies as well.

The Government suggested that the Sentencing Council should be asked to draw up a specific set of guidelines for DPAs. They argued that that would

“benefit the prosecutor, the party entering into the DPA, the court, and ultimately wider society.”

However, the Government withdrew from that intention and they gave two reasons: first, that it would require amendment to primary legislation, which is what our amendment today is; and secondly, because the Sentencing Council is due at some stage to revise its guidelines on offences that include those likely to be covered by a DPA.

We are not convinced that loose, general guidelines are enough in this case. We hold with the Government’s original argument that clarity in the agreements is absolutely key to ensuring that the system is as effective and credible as we can possibly make it. It will be interesting to discover the Government’s thinking behind that change.

I think most people would be happy with anything that speeds up justice and provides a more timely process. Is it not fair to say that the type of activities that these people will be involved in that will come to the attention of the prosecutors will resemble  fraud, money laundering, bribery and market fixing? The idea that anyone should be able to buy their way out of that with something that amounts to a get-out-of-jail-free card is alien to anything that we should be supporting in this place.

My hon. Friend expresses extremely eloquently the concern that many people have about DPAs. We cannot have a situation in which a company can avoid justice in a way that an individual cannot. That is why clarity and transparency in the way the Government were initially proposing to proceed was the best way of going forward. We are challenging the Government to explain their shift in position.

Amendment 95 provides that guidelines issued by the Sentencing Council should be adhered to, and also covers one further concern. The amendment would prevent a DPA including a blanket indemnity from prosecution for past offences, both disclosed and undisclosed. An example of such a case occurred between the Serious Fraud office and BAE in 2010, during which the judge explicitly noted his surprise at the terms of the deal. There is a lot of discretion given in the agreement of a DPA, and it is important that that does not stray into a disapplication of the law. I would welcome the Minister’s comments on those two concerns.

I shall start with amendment 94, which is about the Sentencing Council producing specific guidelines for a deferred prosecution agreement. This was part of the original consultation, which was published in May 2012. The reason for suggesting that there should be such guidelines was because there is an absence of sentencing guidelines on the appropriate fines payable by corporate offenders—companies and the like—for the economic and financial offences in respect of which proposed DPAs would be available. Since the consultation, the Sentencing Council has said that it intends to produce guidelines to cover a number of the offences encompassed by DPAs, including fraud, money laundering and bribery offences. Of course, they will be published. This work comes within the council’s existing remit as set out in section 120 of the Coroners and Justice Act 2009.

So the model for DPAs outlined in schedule 16 specifically provides that the amount of any financial penalty term under a DPA must be comparable to what a court would have been likely to impose on conviction following a guilty plea. Sentencing guidelines will therefore be relevant in determining that amount. Our view is that it will be more transparent to have the sentencing guidelines for the offencesknown. There is very little authority on it at the moment and the basis will be the same as for a guilty plea. These new sentencing guidelines will serve the purposes of the guidance we initially envisaged would be provided by a specific DPA guideline, thereby rendering a specific DPA guideline unnecessary.

We recognise that sentencing guidelines will have an important role in providing consistency and certainty to the parties negotiating the terms of a DPA, in particular when setting the financial penalty. These guidelines will also assist the court. The Sentencing Council is already under a statutory obligation to consult a number of parties, including the Justice Committee, when preparing the guidelines. It is not currently a statutory requirement for the guidelines to be debated by Parliament before  they come into effect. These arrangements have worked well and we believe that examination of draft guidelines by the Justice Committee provides an appropriate level of parliamentary scrutiny. Given this, I am not persuaded that the alternative procedures which we originally thought were the way forward should be put in place.

On amendment 95, we have sought to keep the number of mandatory elements of a DPA to a minimum and have not sought to prohibit the inclusion in a DPA of any particular type of term. However DPAs are not intended to provide an indemnity for prosecution for undisclosed acts. Any conduct not covered by the DPA would remain susceptible to investigation and prosecution in the usual way. The DPA only acts as a bar on prosecution for particular offences specified in the indictment that will be produced which is suspended while the agreement is in force. So it will be absolutely clear—it is a transparent system because it also has a judge supervising it—what offences are covered by the deferment of prosecution. This means that the court will be looking to ensure that the interests of justice are properly dealt with and that it is a fair, reasonable and proportionate agreement. There is also a statement of facts which goes with the indictment which will set out exactly what the prosecution are agreeing to. There is no question that a term in a DPA could seek to provide any broader immunity from prosecution than that.

Can a judge set aside a DPA just as a judge could set aside a consent order?

Yes. There will be a preliminary hearing where the judge looks at what is proposed. He will give his views. There will then be a final hearing where he looks at the thing again. The test is interests of justice and then what is fair, reasonable and proportionate. If on the second occasion he still feels that this is in the interests of justice and passes the test, it would be made public in open court. It would be made known. There would be the indictment which would set out what offences were covered and the statement of facts. So it is an entirely transparent system. The previous Solicitor-General, my hon. and learned Friend the Member for Harborough (Sir Edward Garnier), to whom I must pay tribute, was anxious that we should learn from the American experience and have something that was more suited to the British situation. I hope that in the light of those few comments the hon. Lady will withdraw the amendment.

I am minded to withdraw the amendment, and I thank the Minister for his response. I note that in the US, which he may know is the only other jurisdiction that uses DPAs, the sentencing guidelines are exceptionally detailed to allow for consistency and confidence that no penalty is plucked from thin air or watered down for convenience. The Government need to be particularly mindful of that when using DPAs here.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment 96, in schedule 16, page 275, line 27, at end insert—

‘( ) Where the Director of Public Prosecutions and the Director of the Serious Fraud Office have produced a code under sub-paragraph (1), they must publish it as a draft code.

( ) The Director of Public Prosecutions and the Director of the Serious Fraud Office must consult the following persons about the draft code—

(a) the Secretary of State;

(b) such persons as the Secretary of State may direct;

(c) such other persons as the Director of Public Prosecutions and the Director of the Serious Fraud Office consider appropriate.

( ) Before the code is permitted to come into effect, it shall be laid before Parliament.’.

With this it will be convenient to discuss amendment 82, in schedule 16, page 275, line 33, at end insert—

‘( ) The Director of Public Prosecutions and the Director of the Serious Fraud Office must publish the new code as a draft code.

( ) The Director of Public Prosecutions and the Director of the Serious Fraud Office must consult the following persons about the amended code—

(a) the Secretary of State;

(b) such persons as the Secretary of State may direct;

(c) such other persons as the Director of Public Prosecutions and the Director of the Serious Fraud Office consider appropriate.

( ) Before the code is permitted to come into effect, it shall be laid before Parliament.’.

The schedule specifies that the Director of Public Prosecutions and the director of the Serious Fraud Office will issue a code of guidance for prosecutors on general principles for agreeing DPAs, such as when they should be used and what information should be disclosed by the prosecutor to the company. Our amendments provide that they must consult before publishing the code, just as the DPP does on the CPS code for Crown prosecutors. The provision is important, and we just want to test the Government on why they think our proposal is not a good idea. The amendments are simple and would bring the DPA proposals in line with common practice.

The Government intend the joint code to be comparable to the code for Crown prosecutors issued by the DPP. The DPP and CPS consult widely on the CPS code prior to adopting a new version. The newest version of that code was published only last week following a three-month public consultation. We learned today at Justice questions that we will not have those any more, so it would be interesting to find out what we will be getting. Consultation is established best practice in an area where we have much experience and expertise, and it is vital that we extend that practice into an area such as DPAs, which is uncharted territory for our prosecution service. The Government have sought to ensure that DPAs are consistent with other statutory provisions on guidance for prosecutors, and our amendment takes that to its logical conclusion.

The scheme for DPAs is a new concept, and the schedule provides for bespoke guidance to be issued to prosecutors to support the DPA scheme and to ensure that it operates fairly and consistently. In providing for a bespoke code on DPAs we have sought to ensure parity with the existing statutory provisions on guidance for prosecutors.

The code for Crown prosecutors sets out the general principles that prosecutors should follow when undertaking their usual prosecutorial functions. The code for DPAs will do the same, by giving guidance to prosecutors on the exercise of their discretion to enter into a DPA and on operational matters. As such, the code is principally an operational document, as is the code for Crown prosecutors, and seeks to preserve prosecutorial discretion in operational matters. The fundamental principle of prosecutorial independence means that it is appropriate for the code to be issued by the Director of Public Prosecutions and the director of the Serious Fraud Office.

In the other place we provided assurance that the Director of Public Prosecutions and the director of the SFO will consult jointly on the code of practice for DPAs in the same way that the Director of Public Prosecutions consults on changes to the code for Crown prosecutors. Indeed, hon. Members may have seen that at the end of January the Director of Public Prosecutions published a new edition following a three-month consultation. We consider that that approach will provide adequate opportunity for interested persons to offer their views on the contents of this code.

For that reason, we do not think it necessary to make express provision to publish the code in draft, nor to create any additional consultation requirement, in particular where such requirements are the subject of a direction of the Secretary of State, as the amendments provide. We want to maintain the independence of the prosecutorial side. In addition, a mechanism for putting the deferred prosecution agreement code before Parliament is already provided for in schedule 16, in paragraph 6(3), which requires the code for DPAs to be set out in the Director of Public Prosecutions’ annual report for the year of the code being issued; section 9 of the Prosecution of Offences Act 1985 requires that annual report to be laid before Parliament.

I recognise that we are making new law, and it does not follow that we must slavishly follow precedent. The approach taken in the 1985 Act, however, is founded on that principle of prosecutorial independence, which ought to be timeless, and we should leave as much discretion as possible in the hands of the DPP and of the Serious Fraud Office director. We can and should leave the rest to their good sense.

I hope that the hon. Lady agrees that, on reflection, the Bill provides for the better approach and that we have met her main concern.

I am broadly satisfied with what the Minister has said. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment 97, in schedule 16, page 280, line 25, leave out—

‘or to disgorge profits made from the alleged offence’.

With this it will be convenient to discuss amendment 98, in schedule 16, page 280, line 26, at end insert—

‘( ) Any money that is received by a prosecutor under a term of a DPA that required for P to disgorge profits from the alleged offence is to be distributed according to the Home Office’s Asset Recovery Incentive Scheme.’.

Amendments 97 and 98 would provide for the money confiscated as part of the DPA to go into the Home Office’s asset recovery incentive scheme instead of into the Consolidated Fund—the Treasury—as the Bill specifies. The scheme returns the proceeds of crime to law enforcement agencies, distributing out between the police, the court service and the Crown Prosecution Service.

The amendments provide for disgorged profits—the phrase used—that are received under the terms of a DPA to be returned to where they most appropriately belong. DPAs would be brought into line with other asset recovery arrangements. The numbers could be considerably large, and they could support an important revenue stream for prosecuting and law enforcement agencies, in particular in the light of the current budget cuts being sustained in criminal justice—although there is a lot of money to spend on tagging, we have noted. The change is minor, but has some obvious benefits. I think that the Minister ought to give the amendments serious consideration.

Perhaps I might clarify one matter, which I think I said clearly earlier but will repeat for the record. A judge can refuse to approve a DPA, in the first place. He may also, if there is a breach of a concluded DPA, terminate it. There are also some provisions for variation. It would not be right to say, however, that a judge, once a DPA has been concluded, can set it aside. There is a degree of settled situation, which is reflected in the schedule.

As regards the scheme for DPAs and disgorgement profits, the asset recovery incentivisation scheme is a non-statutory scheme that was established in 2006 and is administered by the Home Office. The purpose of ARIS is to encourage criminal justice agencies to recover the profits of criminality by distributing proceeds recovered under the Proceeds of Crime Act back to front-line agencies. The incentive reflects the resource-intensive nature of recovering profits of criminality. Being a non-statutory scheme, for technical reasons it would not be appropriate to make direct reference to it in the schedule.

This is really disappointing. I tabled the amendment in good faith, and I think that it is a sensible suggestion. It may not be statutory, but it is as near as damn it the best example there is. It is a little unhelpful of the Minister. I think it is legitimate to draw a parallel between the two schemes, although the other one is not statutory.

I have got a bit more to say, so perhaps the hon. Lady will forgive me in a minute.

Similar to the provisions that we are discussing, the core statute dealing with asset recovery, the Proceeds of Crime Act 2002, directs that the money collected under that Act by either the Director of Public Prosecutions or the director of the Serious Fraud Office should be paid into the Consolidated Fund, with no further provision for its destination or use. There is no established mechanism in statute. The asset recovery incentivisation scheme is a non-statutory scheme that exists as an incentive in the context of the Proceeds of Crime Act 2002.

More broadly, as I have said elsewhere, the terms of a DPA will be tailored to fit individual cases, and are likely to include a mix of monetary and non-monetary  requirements. As the agreement is made voluntarily between the parties, neither the prosecutor nor the court that approves a DPA will take any part in enforcing the payment of moneys payable under it. The organisation simply enters into the agreement voluntarily, and we envisage that it would honour fully the terms of that agreement. Where an organisation fails to comply with the agreement, the schedule provides for the consequences, which could ultimately include the termination of the DPA and prosecution of the organisation.

Those reasons obviate the need for a separate, resource-intensive and lengthy process to recover assets. As a consequence, there is no need to encourage that through the asset recovery incentivisation scheme. I submit that it is not the same as the Proceeds of Crime Act 2002. For those reasons, we see no need to make additional provision in relation to the final destination of any profit disgorged under a DPA. I therefore respectfully invite the hon. Lady to withdraw her amendments.

Respectfully, the Minister could just get up and say that he does not want to do it, which would be fine. The reasons that he has given do not add up. He is saying that we cannot have one because there isn’t one, which is our point: we think that there should be one. The Government seem unwilling to pursue it any further. They have put on record that they do not think that it is a good idea. We do, and we will think about it some more and perhaps return to it later. However, the Minister has made his position clear, whatever dubious reasons he has come up with: he will not pursue the idea through the Bill. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the schedule be the Sixteenth schedule to the Bill.

With this it will be convenient to consider amendment 99, in clause 42, page 43, line 17, at end insert—

‘(4A) The provisions under Schedule 16 shall cease to have effect at the end of a five-year period beginning with the day the provisions come into force.

(4B) Before the end of the five-year period detailed in subsection (4A), the Secretary of State must—

(a) provide for a review of these provisions, in consultation with the Director of Public Prosecutions and the Director of the Serious Fraud Office;

(b) set out the conclusions of the review; and

(c) lay a Report on the review before both Houses of Parliament.’.

As the hon. Member for Darlington has explained—or is about to explain—amendment 99 seeks to introduce a sunset clause. [ Interruption. ] It might even be more convenient for me to sit down for a moment and let her do so. Then I could respond to it and deal with clause stand part. If you are happy with that, Mr Caton, I will do so.

I am perfectly happy with that.

The Minister is being most gracious this afternoon. Amendment 99 is effectively a sunset clause providing for legislation to run out in five years and be renewed only after review. We tabled it because the measures are a new step for our system, and we  think that it makes sense to proceed with a safety net. Essentially, it is a probing amendment that seeks to raise the issue of review. This is uncharted legal territory. Although we subscribe to the notion that the measures are a sensible way of dealing with certain cases, the importance of ensuring that we do it well and take public confidence with us cannot be overstated.

I do not expect the Government to take enthusiastically to the notion of a sunset clause, but I impress on them the importance of ensuring that the operation of DPAs, particularly how frequently they are used, is carefully and thoroughly reviewed. The amendment is our way of putting that across. A sunset clause would ensure a review of how well the provisions were performing before they assumed permanency. There might be other ways in which we could ensure that such a review was conducted, so assuming that the Minister will not agree to such a clause, perhaps he will be happy to update us on what measures he thinks will be in place so that a proper review of the provisions and their effect will be carried out.

The hon. Lady is right. I am not going to agree to a sunset clause. It is absolutely right to examine how we monitor and review progress. The effect of such a clause would be for schedule 16 to cease to have effect five years after coming into force. That would be rigid. The Government consider the amendment to be unnecessary because of the measures that were outlined in the other place. We gave an undertaking that we will review the operation of the scheme following its introduction. In any event, we are committed to reviewing all new primary legislation within five years of Royal Assent in line with the Government’s policy on post-legislative scrutiny.

I am curious and take, up to a point, what the Minister says. However, I am aware that, under other measures, the Government have introduced sunset clauses, one example of which is the Scrap Metal Dealers Bill. I am intrigued to know why sometimes it is appropriate and yet other times the Government do not want to engage in such action.

I am happy to engage with that point. It is something that needs to be dealt with. The reason why acceptance would be a difficulty is that particular periods are provided for within the DPA. Therefore, it would be difficult to have a cut-off, as it would mean that, at a certain date, the provision ceases. There would come a point at which no DPAs could be made because of the uncertainty.

We would start the review before the cut-off.

Obviously, the review would be started before that time, but a fixed date means that there would be rigidity.

Furthermore, the Government have said that they are willing to have a full review. We would certainly finish it in five years, but it would start before then. Such an amendment would create unnecessary rigidity, given that the Government are committed to reviewing the matter.

In 2011, fraud cost its victims and the taxpayer £73 billion. That level of criminal activity, which damages the economy, must be tackled and organisations involved in such wrongdoing must be held to account. As we have debated, the National Crime Agency will have a strong focus on combating economic crime. DPAs will support the work of the NCA in that area by offering an additional tool in the battle against corporate wrongdoing, and it will help prosecutors overcome the difficulties associated with bringing organisations to justice for economic crime.

The list of offences under part 2 sets out with absolute certainty the scope of the scheme. The Government are committed to testing the new approach and will monitor and evaluate its use and success before considering broadening it. A DPA will be a voluntary agreement between a prosecutor and an organisation under investigation. In return for complying with tough terms and conditions, a prosecution will be formally commenced and then deferred. However, it is worth making the point—an issue that the hon. Member for Birmingham, Selly Oak raised—that there are, of course, some companies when it would be unacceptable even to consider a DPA. When a company is set up as a vehicle for crime, clearly that would be inappropriate and wrong. There will be many cases when it would not be right, and many cases when it would, so it is correct to be discerning about the matter and to say that the individuals who might have committed individual crimes will, of course, be subject to prosecution if there were evidence.

I am curious about how that works. If the company enters voluntarily into a DPA, how will it then be possible to prosecute an individual? Would the individual not have a reasonable defence that what they did was part of a corporate activity?

No. If an individual has committed criminal offences, that is not a defence.

I may not have put that clearly. I am trying to understand. If a company enters into a voluntary arrangement, surely the individual cannot then be pursued over issues that have already been voluntarily disclosed and agreed. Their sins will be wrapped up in the activity of the DPA. There would have to be exceptional additional behaviour by the individual to result in a personal prosecution.

No, that is not right. One can imagine, in a situation where a company’s management is changed and they realise that there has been wrongdoing, that the company would want to ensure that nothing of this sort happens again. A DPA in those circumstances may well be a good way forward, because it would mean that the company could ensure that it has proper compliance arrangements and can pay the fine and disgorge profits, but the business itself would not collapse, which would have implications for employees and the economy. There is no question but that the individuals who did the original wrongdoing—if the evidence is there, which it would need to be—could and should be prosecuted. It is not a get out of jail free card for executives who have committed crimes, and it should not be.

Transparency and openness are key to this. The American experience, which my predecessor drew on, is different from what is proposed here, which is that a judge will approve the scheme and look to the interests of justice and what is fair, reasonable and proportionate. The DPA will be approved in open court.

DPAs will ultimately enable prosecutors to secure tough sanctions against an organisation and ensure reparation for victims without the uncertainty, expense, complexity and length of a criminal trial. They will also provide certainty for the company. It is worth bearing it in mind that the only penalty that can be imposed on a company, if it is successfully prosecuted, is financial. The advantage of a DPA is that other conditions can be part of the agreement. It is not just a fine; it can be a compliance agreement or a number of other important measures. The DPA has particular advantages and is an important new part of the toolkit in tackling serous fraud and economic offending more generally. I commend the schedule to the Committee. I hope we resist the blandishments of amendment 99.

Question put and agreed to.

Schedule 16 agreed to.

Clause 33 ordered to stand part of the Bill.