Proceeds of Crime Bill

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Mr. Mark Field: There is a temptation on the part of the state, in the broadest sense, or the justices' chief executive, to have two bites of the cherry in terms of the cost of bureaucracy. One cannot underestimate the extensive costs that may be part and parcel of the process. I entirely agree with what my hon. Friend said. My word of warning to the Government is that the newspaper headlines about victims who were told that they would get X, but end up getting X minus 30 or 40 per cent., will not look good. The state, in the broadest sense, is not only able to compensate itself out of the victim's money, but will also no doubt be the beneficiary in a fully fledged confiscation order. I am sure that that is not entirely what is intended and I hope, in the great majority of cases, that the sums will be de minimis.

The real worry is the sheer cost of setting up the agency and all the other paraphernalia that goes with it in relation to court proceedings. There will clearly be a temptation for the agency, which will no doubt be under considerable financial constraints from the Treasury—again, it is a matter of public policy as much as anything else—to consider how its costs can be ameliorated through such a process. That may be to the detriment of genuine victims who are looking for compensation from those who are subject to such proceedings.

The Chairman: Order. I am not accusing hon. Gentlemen of continuing to do this, but I remind hon. Members that the repetition rule does not apply to one person alone. If other Members repeat an argument already made, the rule kicks in.

Mr. Carmichael: I may be about to fall foul of it. Hon. Members will recall that, on Second Reading, concerns were expressed about the position of innocent third parties. The hon. Member for Beaconsfield, through an exemplary use of cosmetic procedure, identified one of the most innocent of innocent third parties. I associate myself firmly with his remarks.

Mr. Ainsworth: Without repetition.

Mr. Carmichael: Hesitation or deviation.

The Chairman: Order. The rule is tedious repetition.

Mr. Ainsworth: Opposition Members have said things with which I do not disagree. However, I do not entirely agree with everything that the hon. Member for Cities of London and Westminster (Mr. Field) said. He must consider the fact—as we must—that the compensation order will be paid because the confiscation proceedings have been paid for and provided, and out of money that is confiscatable. Money that is the proceeds of crime and would have been returned to the state will have been diverted to pay for compensation for victims, after a pro rata share of the costs of discovering and levering out that money has been deducted under the Bill.

I ask the hon. Member for Beaconsfield to withdraw the amendment and I hope that he will. However, for the sake of further consideration, I give the Committee my understanding of the current situation and the size of the matter that we are discussing.

Where a confiscation order was made, the magistrates court would enforce it either by voluntary payment from the defendant or means such as an attachment of earnings, a benefit order or a distress warrant. The magistrates court, not the victim, must meet the enforcement costs. Ultimately, as with a fine, a defendant could serve a term of imprisonment for failure to meet a compensation order. In 2000, the criminal court ordered 102,400 offenders to pay compensation orders. The average compensation order was £150 in a magistrates court and £1,292 in the Crown court. It is thought that the offender pays about 25 per cent. of the compensation that is awarded within the first 25 days and the remainder is spread in instalments over periods that are usually up to 12 months. A high proportion of cases require enforcement action—perhaps 60 per cent.—and around 8 per cent. of compensation cases result in custodial sentences. That is old data—we do not have any more recent—and the last formal research was conducted in 1992.

I give those figures to allow the Committee to consider the matter and I hope that the hon. Member for Beaconsfield picked up, from the tone of my reply, that I share some of his worries. On the basis that we will continue to examine whether the Bill should remain as written, and of my commitment to return to the matter, I ask him to withdraw the amendment.

Mr. Carmichael: Is this an accurate understanding of the Minister's position? He mentioned the average amounts that are recovered at present. The hon. Member for Beaconsfield said that the measure will affect only a small number of people. However, that is an acceptance that people will be affected and provision should be made for them.

Mr. Ainsworth: No matter where we go with the matter, there will always be potential difficulties. The overwhelming majority of compensation cases will not involve confiscation.

Mr. Carmichael: With respect, we are talking about extending the legislation to include, for example, a large fraud case in which one could imagine that compensation would be appropriate.

Mr. Ainsworth: I do not know whether the hon. Gentleman picked me up the wrong way round. I said that the overwhelming majority of compensation cases will not involve confiscation, rather than saying that confiscation cases will not involve compensation. I have not quite got my head around the percentage of confiscation cases that would involve compensation. In all probability, we will wind up dealing with compensation of victims differently because, unless the Crown pursues confiscation, facilities that are brought to those cases will not be available to victims. If the compensation case deals with a relatively small amount in comparison with the confiscation order, to what extent ought we to be looking to pro rata that out? Is it worth doing that, given the presentational difficulties with regard to cases in which we have identified the amount of compensation and are looking to claw a part of it back to repay the costs?

If the compensation was the overwhelming majority—although the statistics suggest that that might not be the case—we might take a different opinion on that matter, because the resources provided by the confiscation proceedings would be effectively applied to recover substantial amounts at great cost, for the benefit of a victim who would have had little or no chance of getting hold of that sum had he been left to his own devices.

The issue under discussion is neither easy nor straightforward. It requires further consideration and I undertake to do that. For that reason, I ask the hon. Member for Beaconsfield to withdraw the amendment.

Mr. Grieve: The Minister has been fair and the Committee's discussion has fully covered a difficult matter.

Although the relevant statistics are old, the Minister highlighted that it is unusual for thousands and thousands of pounds to be ordered to be paid to an individual. That might happen in some fraud trials, but small sums are usually involved. In those circumstances, to impose a clawback to cover the administration costs would be considered unfair by the public. It will bring the system into disrepute—especially as it will be noted that substantial sums are still being recovered by the state.

I am sure that the Minister appreciates that things would be rather different if one could say, ``I am sorry, but those were the costs of getting this money for you, and there is no other money, because that is all that we could lay our hands on.'' However, the matter appears less straightforward, given that the state are pouring into the Consolidated Fund tens or thousands—if not millions—of pounds from the same source. In those circumstances, the public would expect that the victim, who has had an assessment made for compensation, should come first.

However, in keeping with the spirit of co-operation and the friendly tenor of the debate, and given the Minister's assurance that he will further consider the matter, I am happy to withdraw the amendment.

I have not pressed the Minister about who proposed that the clawback should be introduced—whether it was the Lord Chancellor's Department, or the Treasury—but I suspect that the idea might not have originated in the Home Office. Someone ought to go and have a quiet word with whoever dreamed it up.

Mr. Ainsworth: It is unfortunate that the hon. Gentleman has raised that point, as it is in existing legislation.

Mr. Grieve: A previous Conservative Government probably passed it.

The Chairman: Order. I suspect that the relevant Committee was also chaired by me.

Mr. Grieve: Mr. McWilliam, you, as the Chairman, have to exercise impartiality, so nobody can blame you in this instance.

One of the benefits of discussing new legislation—the Minister has sometimes taken me to task about this—is that we debate some clauses that have been on the statute book. That is a good thing, as it gives us an opportunity to see what our predecessors nodded through at various points of the morning or the evening sittings of Committees.

I am grateful to the Minister for the undertaking that he has given and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 55 ordered to stand part of the Bill.

Clauses 56 to 63 ordered to stand part of the Bill.

Clause 64

Management receivers: discharge

11 am

Mr. Bob Ainsworth: I beg to move amendment No. 48, in page 41, line 3, at end insert—

    `(3A) Subsection (2) does not apply to property which the management receiver holds by virtue of the exercise by him of his power under section 49(2)(d).'

The Chairman: With this we may discuss amendment No. 49, in page 41, line 7, at end add—

    `(5) If this section applies the court may make such a consequential or incidental order as it believes is appropriate.'

Mr. Ainsworth: Amendment No. 48 is technical. It ensures that the management receiver is able to retain property that he has realised to meet his remuneration and expenses, as permitted under clause 49(2)(d), and does not have to pass it on to the incoming enforcement receiver. That is the case for making the amendment.

Amendment No. 49 grants the court discharging the management receiver the power to make consequential and incidental orders. The power might be useful when a management receiver is appointed and enforcement is made by the magistrates court, but there is no enforcement receiver. In practice, that would probably never happen, but the power would enable the court to authorise the transfer of funds from the management receiver to the enforcement justices' chief executive.

Amendment agreed to.

Further consideration adjourned—[Mrs. McGuire.]

Adjourned accordingly at one minute past Eleven o'clock till this day at half-past Two o'clock. {**vert_rule**}

The following Members attended the Committee:
McWilliam, Mr. John (Chairman)
Ainsworth, Mr. Bob
Baird, Vera
Carmichael, Mr.
Clark, Mrs. Helen
David, Mr.
Davidson, Mr.
Field, Mr. Mark
Foulkes, Mr.
Grieve, Mr.
Hesford, Stephen
Johnson, Mr. Boris
Lazarowicz, Mr.
McCabe, Mr.
McGuire, Mrs.
Robertson, John
Stinchcombe, Mr.
Stoate, Dr.
Tredinnick, Mr.
Watson, Mr.
Wilshire, Mr.

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Prepared 29 November 2001