Select Committee on Public Accounts Minutes of Evidence

Examination of Witness (Questions 80 - 99)



  80. Can you use county court judgments to enforce fines?
  (Sir Hayden Phillips) No, they are enforced through the magistrates' court system. I do believe that you face very similar problems in the county courts as you do in the magistrates' courts. You are often dealing in some areas with the same population who are in debt and owe money and have the county court judgments against them and they will have fines against them. One of the things we should do is to look to see whether the enforcement systems for civil debt and criminal debt ought not to be handled together in the same way.

  81. That is my point. My understanding is that people are terrified of receiving a county court judgment against them; it absolutely wrecks their lives. They cannot get a bank loan, they cannot get a credit card, they cannot even get a bank account, they cannot get a car, they cannot get hire purchase. It is a disaster and people who suffer from these have their lives changed. It seems to me that using the county court judgment would be a very effective method of collecting the fines. It would push the magistrates' court fines up the list of priorities. I suspect that these people with other financial commitments are putting ahead of their fine to society their payments to credit card companies and banks because the threat of a CCJ is far more serious than anything the magistrates' court can throw at them. Is that right?
  (Sir Hayden Phillips) Yes, the principle is right. One of the things we are looking at is whether, as a result of repeated failure to pay, the person could not be registered, which has a similar effect as a county court judgment, in that it disables you from obtaining credit. We all recognise that at the moment it is far too easy for many people to get credit in circumstances where it ought not to be given. This would be an additional tool at our disposal, but we do not have it at the moment and it would require legislation.

  82. It sound as though you are doing a lot of policy work on this issue. What proportion of defaulters have county court judgments against them already?
  (Sir Hayden Phillips) I am afraid I cannot answer that question either.

  83. It worries me when I hear Permanent Secretaries say that, if they are in charge of developing policy advice to Ministers and they do not really know some of these key questions which immediately spring to my mind I as a layman. Is there something wrong with policy development, policy making in the Civil Service? It is not the first time I have asked this question to a Permanent Secretary and I suspect it will not be the last.
  (Sir Hayden Phillips) I am not pretending to you that it is perfect.

  84. You do not seem to know the answers to some of these absolutely key questions which I would have asked on day one if I were trying to advise on how to increase the proportion of fines which are not paid. Why do you not know the answer to these?
  (Sir Hayden Phillips) What we have concentrated on in this area is trying to find out the ways in which we can improve the system in order to deal with those who are in it now and are likely to be in it. I mentioned to you—and I agree with you—that we ought to look at the relationship between the way civil debts are enforced and the way criminal debts are enforced. I do not have the information at the moment about that. This is not an area which has been looked at hitherto at all.

  85. Could you sent a note about the proportion of defaulters who have county court judgments against them?
  (Sir Hayden Phillips) I will; absolutely.[8]

  86. That will be very helpful. Thank you. May I move on to something to which you alluded in your opening answers to the Chairman? You said that you thought resources were now coming to help you, in particular the fact that you are going to be getting a proportion of the fines collected from 1 April 2002; so you are presumably already receiving a proportion of fines. Is that correct?
  (Sir Hayden Phillips) Yes.

  87. Have you heard of the maxim of government that the body which levies the fine should not benefit from the proceeds of the fine? Have you ever heard of that maxim of government?
  (Sir Hayden Phillips) No. There was a tradition which the Committee will be well aware of under all governments against the hypothecation of revenue, which is what that may represent.

  88. No, it is something completely different.
  (Sir Hayden Phillips) In targeted areas, there have been changes and this is one of those which the Treasury has enabled.

  89. It alarms me that you have not heard of the maxim that the body which levies the fine should not benefit from the proceeds of the fine. Given that you do not know about that maxim, could you work out in your mind why you think there is such a maxim?
  (Sir Hayden Phillips) I understand the point of it.

  90. Which is what?
  (Sir Hayden Phillips) Which is that you do not put into the position in which those who benefit from obtaining the receipts go out and simply do more of what they are doing in order to maximise receipts.

  91. For example, they could impose higher fines than they would otherwise impose on a person found guilty because they know that they would benefit from the proceeds of those fines. Is that not the reason for the maxim?
  (Sir Hayden Phillips) That it produces a perverse incentive?

  92. Precisely.
  (Sir Hayden Phillips) Our judgement is that this will not happen in this case. It would be most unlikely if magistrates' were to get it into their heads that they were in a money raising business in imposing fines on individuals. They take the fact that they have to deal with an individual case on its merits enormously seriously and one should make the judgement of trusting the court.

  93. How do you know? Why do you think the magistrates will not take that view, given that if they impose higher fines, even given the same percentage collection rate, their court will benefit and they will be able to employ more staff in that court to pursue further collections. Why is there not an incentive there? Why is the human nature of magistrates not likely to be susceptible to that incentive, given that we have actually seen it in terms of local authorities collecting parking fines, why will it not happen in magistrates' courts? Why are you so sure, given that this maxim has evolved over hundreds of years of government? Why do you think in this particular case it will not apply? Judges will benefit, the offices of the judges, the magistrates, will benefit from more revenue into their offices as a result of this measure? Why do you think after centuries of applying this maxim, it suddenly will not apply to magistrates today?
  (Sir Hayden Phillips) There are two reasons. One is that it is also true to say over many years that magistrates and judges have always concentrated on the case before them and not let extraneous considerations like that enter their heads.

  94. Do you think judges in Crown Courts should also benefit from the proceeds of fines?
  (Sir Hayden Phillips) No.

  95. Why not?
  (Sir Hayden Phillips) The second reason is that this is not a scheme by which any individual magistrates' court can actually raise money for itself because the amount of money which is available from a netting-off scheme goes to the centre and then is distributed by us in accordance with cases made out by individual magistrates' courts. If magistrates were to start to behave, in my view perversely, and increase the amount of fines in their area, thinking that would result in their getting more enforcement staff, that would be illogical because the whole thing is put together nationally and then is distributed on a national basis to individual magistrates' courts.

  96. So this sentence in the NAO Report is wrong then, that they will be trialing new arrangements in which magistrates' courts committees will be allowed to use money collected to purchase additional staff resources. That is wrong, is it?
  (Sir Hayden Phillips) It is not incorrect, but it does not tell you the fact that the way in which it works is that the money which will become additional flows to the centre and then distributed by the Department to individual magistrates' courts. So there is no direct connection between the amount any individual court raises and what it gets back. There is a connection between the amount raised nationally and what is then available to distribute to individual magistrates' courts.

  97. I hope that is made clear, because it is not made clear from the report. Even so, collectively there is an incentive for magistrates as a whole to raise more money through fines, so their profession as a whole will have more money from enforcements. I think it is a very dangerous route to travel down and I am alarmed that you as the Permanent Secretary of the Lord Chancellor's Department are not aware of that maxim of government. May I suggest that you go away and look it up and then perhaps you might apply it to future policy areas? You are contravening a terribly important maxim. You said that you want to use other penalties where fines are not possible, where people just cannot afford to pay the fine. What proportion of community penalties are actually served today if you cease applying fines to individuals who cannot afford to pay the fines? If you apply community penalties, what proportion of those community penalties are being enforced and are served today?
  (Sir Hayden Phillips) If you want the overall number of community penalties nationally which are being served, I shall have to send you that.

  98. But of the ones which are passed, what proportion are actually served? Is it 100%.
  (Sir Hayden Phillips) No.

  99. Is it 50%?
  (Sir Hayden Phillips) I should think it is somewhere in the order of 50%.

8   Note by witness: As the Parliamentary Secretary, Lord Chancellor's Department told Mr Gibb in answer to his Parliamentary Question, this information is not collected centrally. (HC Deb, 12 July 2002, col 1225W-1226W). We will look to see if there is any way of linking data on civil and criminal defaulters Back

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