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Mr. Hogg: Will the Minister be good enough to tell the House the difference in principle between protecting under clause 310 an innocent purchaser for value of what would otherwise be recoverable property and a bona fide supplier of goods such as the local plumber?

Mr. Ainsworth: I think that it is quite clear what the difference is. The powers in the Bill give us various abilities to trace the proceeds of crime or that which has come to represent the proceeds of crime. To do that, we need to be able to trace it through the many transactions that might take place, some of which will be the quite genuine transactions that people enter into throughout their lives, while others will be transactions designed to hide the proceeds of crime.

Norman Baker rose

Mr. Ainsworth: I have to tell the hon. Gentleman that I cannot respond to two Members at once.

In giving the powers to trace the eventual representation of the proceeds of crime, we need to protect the genuine, bona fide purchaser for value, but I do not believe that the state needs to take on the responsibility for compensating the unsecured creditors of criminals. I am not sure that the right hon. and learned Gentleman has ever argued that position in the past, and he should think very seriously about some of the results that might flow from that proposition.

Norman Baker: The Minister said, if am not misquoting him, that he believed that the Lords amendments would undermine the confiscation procedures. Is it not the case, however, that those who have ill-gotten gains will still lose

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them, and that the only questions are: what will happen to those ill-gotten gains, and should genuine creditors be able to reclaim their money?

Mr. Ainsworth: If I thought that that was the case, I would give serious consideration to the amendments. I do not believe, however, that members of the criminal fraternity are so naive that—if we put these proposals into the Bill—they would not be able to conjure up situations in which they owed all sorts of people money, to ensure that, if a confiscation order were made against them, they would have no effective assets that were not owed to whoever—their wife, perhaps, or Joe up the road. In that way, they would make sure that the state could not get its hands on the proceeds of crime.

Norman Baker: I understand the Minister's argument. Does he accept, however, that there will be many occasions on which innocent tradesmen and others—many of whom will be adversely affected by the provisions in the Bill—will be genuinely innocent victims? Is he saying that, if such people have to suffer, that is a price that must be paid for the greater good?

Mr. Ainsworth: There will be such occasions, but I ask the hon. Gentleman to consider this argument. When people become unsecured creditors of other individuals, it is a decision that they take for themselves, and a risk that they take upon themselves. There are many circumstances in which they effectively forfeit what they have loaned to the individual concerned. If someone owed tax, for example, and had no other means, would the hon. Gentleman suggest that the Inland Revenue should not collect the tax, and that the unsecured creditors should be paid instead, coming ahead of the tax man?

Would the hon. Gentleman suggest that, if a fine were imposed by the court on someone as a result of his criminality, the payment of the fine ought to come lower down the list than the payment of an unsecured creditor in relation to the call on that person's assets?

There are lots of circumstances in bankruptcy, court and other proceedings in which people do not come at the top of the list because they are unsecured creditors. I see no reason for their coming top of the list with regard to confiscation. My real problem—I hope that the hon. Gentleman accepts this—is that the scope for abuse is absolutely phenomenal—to the point where it would render confiscation inoperable.

Mr. Mark Field (Cities of London and Westminster): I appreciate that there is scope for abuse, and the Minister is right to refer to it. Equally, there is the issue of commercial certainty and common sense. In answering the hon. Member for Lewes (Norman Baker), the Minister referred to the real point on insolvency. However, does he not appreciate that there is an inconsistency between the Government's position in that regard and the new Enterprise Bill, under which, of course, the Crown preference is being done away with? It is therefore now understood that the Crown—be it some tax authority or other—would not necessarily have preference in such circumstances when an insolvency occurred.

Mr. Ainsworth: Let me continue with the notes that I had planned to read to the House. Insolvency will be picked up and, I hope, dealt with satisfactorily. If not, we may wind up differing on the issue.

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As I was saying, the enforcement authorities would be in the front line of implementing the amendments, so I asked my officials to ask them what they think. [Interruption.] The right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) has evidently lost all interest in the Bill.

We asked those who would wind up defending such arrangements—Customs and the CPS, for example—what the practical effect of the amendments would be. They told us that it would be highly detrimental to the operation of an effective confiscation system. They consider, as we have always argued, that the amendments would provoke a flood of bogus applications from alleged creditors, who are often the criminal's associates, based on spurious documents purporting to show that debts occurred before the relevant date, when in reality they did not.

The amendments would also encourage defendants to defeat the confiscation process by running up legitimate debts, safe in the knowledge that the authorities would be left out of pocket at the end of any confiscation proceedings. That would deter the authorities from taking on cases in the first place.

Mr. Hogg rose

Mr. Ainsworth: Now that the right hon. and learned Gentleman has decided to pay attention to the proceedings, I give way to him.

Mr. Hogg: I know that the Minister is concerned about the position of employees. Will he please tell the House the answer to this question? If a bona fide person is employed by the person against whom the confiscation order is made and the effect of the confiscation order is to prevent the person against whom it is made from paying his employees, will the employee have any claim as a secured creditor, or is he simply out of pocket?

Mr. Ainsworth: Let me ask the right hon. and learned Gentleman to think about the issue that he raises. I do not know whether he is suggesting that, because somebody is an employer, that protects them against the power to confiscate the proceeds of crime.

Mr. Hogg: Employee protection.

Mr. Ainsworth: I am talking about the employer. I do not believe that employers should be put in any special position where they are protected because they are employers and allowed to continue to keep the profits of crime.

Mr. Hogg: Employee protection.

Mr. Ainsworth: Employees have statutory protection in many, many circumstances. I see no measures in the Bill that would decrease the protections given to employees in many circumstances in which they find themselves on the receiving end of the demise of their employer.

Mr. Hawkins: Someone who is owed wages, but has not yet been paid, simply becomes yet another unsecured creditor—is that not true? The Minister may not fully understand the implications of his own legislation,

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but there is no doubt that owed wages would simply disappear if the confiscation order were made. Then there would be no security for the person who was owed.

5.45 pm

Mr. Ainsworth: As I think I have told the hon. Gentleman, I do not believe that because someone is an employer—

Mr. Hawkins: That is not the point.

Mr. Ainsworth: It is the point. Will the hon. Gentleman listen for just a minute? I do not believe that because someone is an employer and therefore has the responsibilities of an employer, a separate set of regulations should govern what that employer should get away with in terms of profits from crime. Furthermore, I do not think any measures in the Bill are detrimental to the statutory protections offered to employees in the many other circumstances in which their employer's demise may take place.

Rob Marris: It appears that the Opposition want to put the employee of someone subject to such an order in a better position than the employee of a company that goes bust. In the latter case, the holders of fixed charges and floating charges would in many instances take all the money. The discharged employees would have recourse only to the Secretary of State's redundancy fund, which would apply following a restraint order against, say, a drug-dealing employer.

Mr. Ainsworth: My hon. Friend is right. It is being suggested that employees of a criminal employer would enjoy greater protection than those of a legitimate business enterprise. I do not know whether Conservative Members believe that that ought to be the case, but if they want to advance such an argument they can wait until I sit down. It would certainly be interesting to hear what they had to say.

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