Clause 7 - Confiscation of assets

Modern Slavery Bill – in a Public Bill Committee am 9:45 am ar 9 Medi 2014.

Danfonwch hysbysiad imi am ddadleuon fel hyn

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

Photo of Mark Pritchard Mark Pritchard Ceidwadwyr, The Wrekin

With this it will be convenient to discuss the following:

Clause 8 stand part.

Clause 9 stand part.

Photo of Diana R. Johnson Diana R. Johnson Shadow Minister (Home Affairs)

I have some questions about this group of clauses, which we all welcome, as they represent a sensible way forward. We want human traffickers to lose all their assets, if at all possible, so we support clause 7. Nevertheless, I want to press the Minister on a number of points.

What assets recovered under clause 7, if any, will be retained by the police to provide further resources to fight human trafficking? We know that the confiscation of major criminals’ assets has so far been far from satisfactory—a lot more can be done. The Labour party has been working with the former Director of Public Prosecutions, Sir Keir Starmer, on a review of the current situation with a view to tabling a series of amendments in the other place, where another Bill is currently being examined. Depending on what happens in the other place, we might wish to revisit clause 7 on Report and table some amendments to improve it.

Will the Minister comment on the need to improve the court’s power to get full disclosure of assets, particularly in relation to third-party claims, and on the role of international co-operation? Human trafficking obviously involves many countries—not only in Europe, but around the world—so will she say what more she thinks must be done to allow UK courts to restrict the disposable assets of foreign nationals and demand that liquid assets be returned to the United Kingdom? Will she  also comment on the need to improve—if she thinks such improvement is appropriate—the mutual assistance arrangements with other countries, notably EU partners?

Turning to clauses 8 and 9, the Opposition fully support compensation for victims wherever possible, but I want to press the Minister on why clause 8(1) says that the Crown court “may” make

“a slavery and trafficking reparation order against a person”.

Will she explain why it does not say that the Crown court “shall” make such a reparation order?

When we were discussing clause 3, I gave an example of a case in Lincolnshire where 25 victims were rescued from forced labour, of whom 12 gave witness statements. If the CPS could take those 12 individuals’ cases to court and it was found that human trafficking and forced labour had taken place—bearing in mind that there were 25 victims, but only half had their cases taken to court—would it be possible under this Bill for all 25 victims to receive compensation, even though the court had reached findings on only those 12 cases? I want to be clear about whether that would be possible, or whether compensation will only ever be for victims in cases where there is a specific conviction.

Clause 9 is about the court having to consider a defendant’s means to pay a reparation order. Will the Minister tell us how we can be sure that, whatever means the individual has to pay, compensation for the victim is prioritised? The Bill already says that compensation will take precedence over fines, but could she go further and say how she will ensure that the highest priority is given to the victim?

When a court considers fines and confiscation of assets, it normally protects assets that it considers are necessary for the defendant to continue with their livelihood. That presents us with some interesting problems, particularly around the issue of a business using forced labour. I am particularly thinking of a farm, or cases such as the Rooke case, which I referred to earlier, or the cases that were also referred to earlier of gangs of labourers being moved around the country to tarmac people’s front drives. Can the Minister set out her thinking about how assets in such cases—I guess they would include a van, a piece of land or a building—could be dealt with, in terms of protecting the defendant’s livelihood?

With these orders, a defendant will normally produce evidence about their means. Will the CPS challenge what the defendant says? Will it go on some kind of fact-finding mission to establish whether what the defendant says about their assets is correct and that full disclosure has been made? If the CPS is not responsible for doing that work, who is? Will victims be able to make representations and challenge the evidence that a defendant presents about their assets? As we have discussed, many victims of trafficking and forced labour are vulnerable, and a court can be a very intimidating place for them, so will legal aid be available to assist them to pursue or challenge compensation orders?

Earlier, I made the point that there are people who are victims but whose case has not been tried in court. Will they be able to take action to challenge any compensation order made in court? Will they be able to  access lawyers or legal aid, or will such access be restricted to victims in cases where there has been a conviction? Is there any opportunity for an order to be made at a later date?

Photo of Sarah Teather Sarah Teather Democratiaid Rhyddfrydol, Brent Central 10:00, 9 Medi 2014

The hon. Lady is asking some interesting questions about legal aid. Has she considered the influence of the residence test and, if so, does that influence underlie part of her concern? Effectively, I am putting that question through her to the Minister.

Photo of Diana R. Johnson Diana R. Johnson Shadow Minister (Home Affairs)

The hon. Lady asks an interesting question and I hope that the Minister can shed some light on the issue. Legal aid has gone through major changes in recent times, but I am not sure that much thought has been given to the effect of those changes on this particular group of victims. I guess that it is quite a small group at the moment, but we hope that more victims will come forward and that there will be more prosecutions. The Minister said that that was one of the aims of the Bill, but would she focus on legal aid? For practitioners in this area, it would be helpful to know what resources are available to assist this particular group of victims.

Finally, is it possible to make a claim for compensation or reparation at a later date? If a trafficker or someone engaged in the use of forced labour has assets that they have managed to hide away but it becomes obvious at a later date that those assets are available, is there a limit on how long people have to make a claim, or is the period indefinite? Those are my questions about the practical application of clauses 7 to 9.

Photo of David Burrowes David Burrowes Ceidwadwyr, Enfield, Southgate

I want to make a couple of comments about clauses 8 and 9, which I welcome.

The shadow Minister mentioned clause 8(1), which states:

“The Crown Court may make a slavery and trafficking reparation order”.

I welcome the orders, but will the Minister clarify how the reference to “may” rather than “shall” interplays with the court’s statutory duty always to consider compensation, which is provided for under the Legal Aid, Sentencing and Punishment of Offenders Act 2012? Given the statutory duty always to consider compensation, will the court always be obliged to consider slavery and trafficking reparation orders?

On the impact of the orders, clause 9(3) says:

“The amount of the compensation is to be such amount as the court considers appropriate having regard to any evidence”.

I would be interested to hear what evidence the Minister anticipates. There has been lots of debate about how far a victim impact statement can lead to effective compensation orders. In this instance, work could be done on how such statements can properly express the true impact of modern-day slavery on a victim. Ordinarily, when a matter comes to the court, the court looks at the impact of the immediate crime on the victim. Statements are taken, and compensation claims are made. With a victim of trafficking or modern slavery, however, the concern is that the impact is not just about the immediate time when they come before the court; there are long-term consequences, which can last a lifetime. It is important  that those are expressed, particularly when looking at the health consequences for a victim, and that victims receive adequate compensation. It is also important that those responsible for putting people in a state of slavery and for the long-term impacts of that make reparation over what could be a number of years. I therefore ask the Minister for assurance that the slavery and trafficking reparation order will really bite and reflect not just the immediate, short-term impact on victims, but the long-term consequences.

Photo of Karen Bradley Karen Bradley The Parliamentary Under-Secretary of State for the Home Department

I thank the shadow Minister and my hon. Friend for their contributions.

On clause 7, it is vital that we take seriously the confiscation of criminals’ assets, and the Government do. There are many serious and organised criminals for whom a jail sentence is merely an occupational hazard. Serving time in jail is no disincentive to leading a life of crime if, at the end of that sentence, and often during it, a serious criminal has access to the assets they accrued through their criminal activities and can continue those activities using those assets.

The clause looks specifically at confiscation orders relating to modern slavery offences. It should be looked at in the context of the other work the Government are doing, through the Serious Crime Bill, to strengthen the Proceeds of Crime Act 2002 in relation to the confiscation of the assets of serious criminals.

The clause acts on recommendations made by a number of parties, including the pre-legislative scrutiny Committee, to change the definition of offences in the 2002 Act to include the offences in the Bill and make them lifestyle offences, which means the courts will have access to more of the assets than they otherwise would. That is a sensible suggestion, which the Government were happy to act on.

The Serious Crime Bill, which is going through the other place, amends the 2002 Act to enable law enforcement agencies to seize criminal assets more quickly, close loopholes that criminals use to get around confiscation and crack down on those who try to avoid paying them. There are harsher penalties for those who do not pay the confiscation orders. There are new rules about the disclosure of assets and who has the right to assets before the guilty verdict is given, to ensure that we stop the legal wrangling that has taken place, with many people having claim to assets once a defendant has been found guilty. I hope that the Committee agrees that we are taking significant action against serious and organised criminals to ensure that they are deprived of the assets that enable them to continue their criminal activities.

The shadow Minister and my hon. Friend the Member for Enfield, Southgate, asked a number of questions, which I will do my best to try to get through. I will write to the Committee to clarify any points that I do not answer directly. The shadow Minister asked how much money will be recovered from those responsible for modern slavery. It is difficult to predict, as I am sure she understands. More than £2 million has been recovered from human traffickers in the past four years, but there could and should be more. The inclusion of the “criminal lifestyle” offences under clause 7, for the purposes of the Proceeds of Crime Act, will assist the courts in recovering more assets from the criminals.

The shadow Minister asked about the proportion of assets that would be recovered and how much would be available to the police to enable them to fund further operations. I will deal with clause 8 in a couple of moments, but the first priority in all cases will be to use seized assets to provide reparation to the victims. I understand the point that she raised; victims will be the number one creditor. I am going back to my accounting days and remembering priority creditors; the victims under a reparation order will be the priority creditors and will have first call over any seized assets. Any seized funds that are left over will benefit criminal justice agencies through the asset recovery incentivisation scheme, which returns a proportion of sums recovered to law enforcement, prosecution and enforcement agencies. The amount of assets recovered using confiscation orders continues to increase since ARIS was introduced and over the past three years more than £238 million has been returned to front-line agencies.

Photo of Michael Connarty Michael Connarty Llafur, Linlithgow and East Falkirk

There was some discussion in the Joint Committee about when someone’s assets could be frozen. There was some good evidence about freezing assets on suspicion, which happened in Italy when it passed the anti-Mafia Act. As soon as someone was suspected of being involved in a Mafia scheme, all their assets were frozen before they were taken to court or charged; millions of pounds were gathered that would be spirited away if they waited until that person was charged. That was one of the reasons why the Mafia war was successful. Have the Government reached a view on whether they would, in fact, take the same line in freezing assets of suspected traffickers before they are even charged?

Photo of Karen Bradley Karen Bradley The Parliamentary Under-Secretary of State for the Home Department

I will come to that in a couple of moments, but first I will finish discussing ARIS. Although the scheme is not on a statutory footing, there is an expectation that the moneys distributed under ARIS will be used to fund improvements in asset recovery or for front-line policing. There is therefore no need to ring-fence a proportion of assets specifically for the police to fund modern slavery operations. It is for the police to determine how they use the funds available to them, but we expect that seized assets will be used for front-line operations.

I have briefly discussed the Serious Crime Bill. Third-party claims are responsible for delays in the confiscation process, which they needlessly complicate and lengthen. The Serious Crime Bill enables the court to determine the extent of the defendant’s interest in a particular property at the confiscation stage to help prevent late applications as a result of third parties delaying proceedings. The defendant will be required to confirm or deny the details of any potential third party interests, including spouses, identified by the prosecution. They will also be required to provide details of any actual or potential third party interest in any of the property that the court will take into account at the confiscation hearing that has not already been identified by the prosecution.

The shadow Minister asked if there was more that could be done by police and prosecutors to restrain or confiscate assets overseas. That is something that is close to my heart because I have been on a number of  foreign trips where the topic of asset recovery has been discussed. Making that a priority for overseas Governments as much as for our own is incredibly important to ensure that we can seize those assets and ensure they are taken from the criminals. We are looking through the serious and organised crime strategy at the recovery of hidden assets abroad. The UK is engaging with key countries to encourage and improve international co-operation in asset recovery, which, historically, has been poor. We have already engaged with Spain, China and the United Arab Emirates and will be working with the Foreign and Commonwealth Office and the CPS to negotiate further agreements and understandings with other key countries, including Romania, South Africa and Ghana. Those agreements relate to asset sharing. There is a long-standing international position that the country that enforces an overseas order in its territory keeps the assets that it confiscated. There is a young but developing international concept of assets being shared between countries, particularly where victims are involved. I emphasise that that is a new concept in international law—the CPS, for example, now has dedicated resources located in the priority countries, and works with prosecutors overseas and with others. We understand the ways in which we can seize assets from UK criminals who are located here, but there are other hurdles that have to be overcome locally in overseas jurisdictions. We need to understand all the nuances of the law and the legal systems to ensure that we are getting hold of those assets in a correct and appropriate way and depriving criminals of those assets.

The shadow Minister asked if there were any additional powers that might be useful in promoting success and recovering overseas assets. The tools for international recovery already provide for successful co-operation between the UK and our overseas counterparts. However, the tools have historically been underused, both here and overseas. The situation has undoubtedly improved, but there is more that can be done to encourage the use of those tools. Bilateral agreements that we have recently concluded and are seeking to negotiate with priority countries should have the effect of improving co-operation overseas. I hope that the new European Parliament and Commission will taking the issue seriously and look at it on a Europe-wide basis, ensuring that we have appropriate agreements to deprive serious criminals of their assets and to act as a much bigger deterrent than any jail sentence ever could.

There was a question about the integrity of the financial information and who carries out the investigations. Disclosure of assets is done as part of the financial investigation process that takes place for the confiscation hearing prior to a confiscation order being made. Financial investigators typically work for the police or the National Crime Agency and ensure that that information is gathered.

Clauses 8 and 9 deal with reparation orders, which are a new measure that the Government felt strongly should be introduced to ensure that victims received reparation for the suffering that they had been put through. Too often, the courts looked at financial loss in compensation orders and a victim of slavery clearly does not experience financial loss. We felt that a new order that recognised the unique circumstances of slavery victims was important. We have talked about success, but I want to put on the record the fact that there have been only three human trafficking cases in the past  11 years where both a compensation order and a confiscation order have been imposed. That is simply not good enough. We owe it to the victims to ensure that they receive the reparation that they properly and rightly deserve. We expect the courts to introduce reparation orders as a priority. I repeat that the victim has top priority over any assets seized. We expect victims to receive their reparation before any other authority or public body does so.

My hon. Friend the Member for Enfield, Southgate and the shadow Minister asked why the word “may” is used rather than “shall”. We have considered that point long and hard. Should we impose this as a mandatory condition on the courts? On balance, we feel it is better to give the courts discretion not to make orders if, for example, the defendant does not have the assets to make full payment. We would do a disservice to victims if we led them to believe that the reparation order would come to them and then there were no assets and they felt deprived of the reparation they expected.

Photo of Diana R. Johnson Diana R. Johnson Shadow Minister (Home Affairs) 10:15, 9 Medi 2014

I listened with interest to what the Minister just said. If the clause said “must”, which is mandatory, I would understand the argument that the Minister puts forward. However, would not changing the wording from “may” to “shall” indicate the weight of opinion that we should wherever possible apply for one of these orders? “May” is a lesser encouragement to do something; “shall” would be a better way to make clear our intention.

Photo of Karen Bradley Karen Bradley The Parliamentary Under-Secretary of State for the Home Department

The shadow Minister drags me back to my previous life as a tax adviser, where I argued at length with an inspector of taxes whether “shall” was mandatory. It was an interesting debate that I will not share with the Committee. There is some debate around “shall” and many in law consider “shall” is mandatory [ Interruption. ] As the Whip says from a sedentary position, in English as well.

The provision makes it clear that the court must give reasons if it makes an order. We encourage courts to make an order wherever possible. That is certainly the message to come out of the Committee: we expect the courts, where possible, to impose a reparation order on someone who is found guilty as part of a confiscation hearing. Assets must be available if that is to be possible.

The shadow Minister asked whether a victim who was not part of the case can be covered by a reparation order. A reparation order follows a conviction. Inevitably, it can be given only where the court has been persuaded that the defendant committed a slavery and trafficking offence against the victim. Therefore, if someone is a victim of a defendant who has been found guilty, and the jury has been convinced of that, a reparation order can be applied. If there is another victim who has not been through the court process and the defendant has not been found guilty of offences against that victim, I do not see how the reparation order could be applied. We will look at that to see if there are possible ways to do so.

Photo of Andrew Stunell Andrew Stunell Democratiaid Rhyddfrydol, Hazel Grove

I support the provision as drafted, because it will give some encouragement to victims who are considering whether they are able to give statements. They would know that if they did give statements and a  conviction was secured, they would be eligible for reparation. That perhaps connects back to the point the Minister made about “shall”, “may”, “if” and “must”—I admit that every time I hear a discussion in this place about the interaction of those words, I leave slightly more confused than I started.

It would be helpful if the Minister indicated how the guidelines would address that and the interaction between that and what the CPS might do. I can see the situation that was suggested of 25 victims but only 12 going to court. It might be the CPS that chose which 12 go to court, not the victims. There might be an element of discrimination as a result of more offences not being brought to the court’s attention for some legal, utility purpose. Will the Minister take that away and give some thought to the idea?

Photo of Karen Bradley Karen Bradley The Parliamentary Under-Secretary of State for the Home Department

I thank my right hon. Friend for his contribution. It is useful to see the reparation order as an incentive to give evidence, which will help victims to have the confidence to give the evidence that is needed to get prosecutions. I will cogitate on my right hon. Friend’s point.

My hon. Friend the Member for Enfield, Southgate asked whether the court could consider the victim impact statement. Clause 9(3) allows the court to consider evidence when setting a level of compensation, which could include victim impact statements or evidence about health problems.

A question was asked about the time limits for reparation orders. There is no time limit on making reparation orders, and confiscation orders can be made or varied after the fact. If more assets are discovered later, the court can increase the value of the reparation order to reflect the new information.

On clause 7, the shadow Minister asked about the test for restraint of assets. In the Serious Crime Bill we intend to reduce the test from a reasonable cause to believe that the defendant has benefitted from criminal conduct to a reasonable suspicion. We believe that will allow restraint orders for freezing assets to be applied for at an earlier stage of an investigation.

I hope I have covered all the points that were made. If I have not, I will write to the Committee to clarify any points I have not covered. Given the welcome that the shadow Minister gave to the clauses, I hope the Committee will accept them.

Question put and agreed to.

Clause 7 accordingly ordered to stand part of the Bill.

Clauses 8 and 9 ordered to stand part of the Bill.