Previous SectionIndexHome Page

6 pm

Mr. Hogg: My hon. Friend points out that the courts have experience in determining whether or not a claimant is bogus. Will he also point out to the Under-Secretary that clause 310 and related clauses make provision for exactly that process?

Mr. Hawkins: As my right hon. and learned Friend points out, certain other parts of the Bill are inconsistent with this one. In our lengthy debates in Committee, we tried very hard to ensure that, so far as other aspects of the Bill were concerned, those who are bona fide are protected. The Government have accepted our argument in other parts of the Bill and in their own provisions, and we find it difficult to understand why they have not accepted the same logic here.

Stephen Hesford (Wirral, West): Will the hon. Gentleman address the point that was made earlier? The principal reason why Labour Members will reject the amendments is that sham creditors could be put forward by drug dealers, for example, and it would take for ever to get the compensation orders through the courts. The hon. Gentleman has not mentioned that point, and he should deal with it.

Mr. Hawkins: The hon. Gentleman is mistaken—that is precisely what I have been talking about. Indeed, I quoted Lord Goodhart, who explained that the purpose

18 Jul 2002 : Column 515

of the amendments is to prevent the creation of bogus debts. The hon. Gentleman should know from his own professional expertise that in bankruptcy cases, courts frequently have to deal with supposedly legitimate debts that turn out to be bogus. Courts therefore have enormous expertise in such matters.

We are talking about trying to prevent entirely innocent people from being caught by these provisions as a side wind. It is a question of introducing not loopholes for employers, but protection for employees and small traders.

Mr. Davidson rose

Stephen Hesford: For the benefit of the House, will the hon. Gentleman explain what will happen if drug dealers know that they can gum up the works? My hon. Friend the Minister mentioned staffing the agency in respect of Northern Ireland and other places. If drug dealers know that they can gum up the works with all this nonsense, they will do so, and the Assets Recovery Agency will spend its time gazing at its own navel.

Mr. Hawkins: My point is that the works would not be gummed up because the courts have great expertise in showing easily what is bogus and what is not; indeed, that process is already commonplace in insolvency cases. These amendments were put forward in another place on the basis of making it clear, specifically and in terms, that there is no intention of opening a loophole for bogus claims.

Several hon. Members rose

Mr. Tom Harris: Perhaps the hon. Gentleman can deal with a specific example of what Labour Members are worried might happen if the amendment were accepted. What if it emerged that a suspected drug dealer who is appearing before the courts owes hundreds of thousands of pounds to, for example, the much maligned sauna parlour or tanning shop? Indeed, we discussed such an example at length in Committee. Such premises are often owned by relatives or friends of drug dealers. With a good accountant, it would be very easy to wrap up such a process interminably—to the extent that such confiscation orders would mean absolutely nothing.

Mr. Hawkins: I am afraid that the hon. Gentleman is mistaken in thinking that it is easy to wrap up these matters interminably. Given the existing expertise in our courts, I do not accept that it would be at all difficult to disentangle the bogus from the genuine. That happens all the time—day in, day out, week in, week out. It would not gum up the works.

Mr. Bob Ainsworth: The hon. Gentleman says that it happens all the time and that that is the reality of life, but let us consider that reality. He talks about trying to protect the little man, but he will surely accept that small business people have to protect themselves from default every single day of the week. When was the last time he managed to get a double glazing firm to fit windows without its receiving some money up front? How much work has he ever got a plumber to do without providing

18 Jul 2002 : Column 516

some kind of credit first? He is a Member of Parliament who is clearly not going to rush off, yet such people still seek to protect themselves. As he well knows, that is the reality of life as it affects the little man now.

Mr. Hawkins: I do not accept that that is common practice for small firms. It is not easy to obtain security for small debts. Lord Falconer of Thoroton repeated the argument that that is the way of the world. However, in reply, Lord Goodhart said that

the trader

Vera Baird: I intervene in a genuine search for enlightenment. The point has already been made by several hon. Members, but all we are really concerned about is a situation in which someone is forced into bankruptcy or insolvency. If the director takes away part of that person's assets but he still has some left, he pays his own debts. If he is forced into bankruptcy or insolvency, the hon. Gentleman wants to protect the little man from that situation; but why should the little man in that situation be in any better position because the criminal has been forced into bankruptcy by this legislation as opposed to by the VAT man, the tax man, his mortgagees or anyone else? [Interruption.]

Mr. Hawkins: The simplest answer—as my hon. Friend the Member for Beaconsfield (Mr. Grieve) has just pointed out from a sedentary position—is that in this situation there is no debt. That is what makes it different from the conventional bankruptcy. The hon. and learned Lady shakes her head, but I hope that the Minister will accept our good will. We are not trying to drive a coach and horses through the legislation: we are trying to protect entirely innocent people. The Minister knows that and we discussed the issue at length in Committee.

The debate will not improve by repetition, but when the Minister responds I hope that he will accept that when Baroness Buscombe and Lord Goodhart proposed the amendment in the other place, they were supported by many peers, of all parties and none, including Law Lords who understand the significance of the point that we are making. This is not simply a matter of removing the assets of the criminals: it is ensuring that no more innocent victims are accidentally caught in the side wind from the Bill.

Vera Baird: Much of what I intended to say has already been said, so I shall be brief. Unsecured creditors, by definition, do not have security for their debts. They are hostages to whatever befalls their debtor. He may run

18 Jul 2002 : Column 517

away and go overseas, and if they cannot get their money, that is hard luck. If the debtor becomes insolvent or bankrupt, again the creditors might not be able to get their money. That is not a new situation, nor is it unexpected. In business, that sort of thing needs to be taken in one's stride.

I do not accept the argument put vicariously by the hon. Member for Surrey Heath (Mr. Hawkins), for the hon. Member for Beaconsfield (Mr. Grieve), that the order does not constitute a debt to the state. Once an order has been made, there could be no more acute debt to the state. Why should particular protection be given in such cases?

Mr. Grieve: I disagree with the hon. and learned Lady. Generally speaking, in civil litigation or even in tax there is a legal obligation of money owing by one person to another. In this case, although I fully support the institution of the new regime, there will be no debt owing. The money will be taken not because it is owed as a legal debt, but because its origin is tainted. That is a distinct state of affairs and that is why it would be proper to look to the other victims of the offender, which would include the small creditors.

Vera Baird: That intervention does not make sense. Once the order has been made, there is a debt to the state. It is as simple as that, and no alternative argument can alter the matter. The order will push the defendant into bankruptcy, at which point the debt becomes a debt to the state. It is at that point that a person owed money by the defendant will get into difficulties.

Mr. Boris Johnson: The hon. and learned Lady may be right that, in her legalistic phrase, it is a debt to the state, but does not the state also owe a duty to the innocent people who will be caught up in this expropriation of money?

Next Section

IndexHome Page