Serious Crime Bill [HL]

My Lords, the noble Lord knows as well as I do that the reason it will not have to appear in the Bill is that the jurisprudence, which has certainly been well established for as long as I have been at the Bar and, I would hazard a guess, even as long as he has, tends to emphasise that point. The sliding scale has been with us for a very long time. The most recent authorities, however, particularly in relation to these issues, have driven that point home. The court has said on a number of occasions that that is the case. These orders are not about punishing people without proof; they are not punitive. Rather, they are proposed to be preventive. They are a means of prevention based on our most senior judiciary, sitting in the High Court, being satisfied of the person’s involvement, or likely involvement, in serious crime. If an order is to be imposed by the Crown Court, it must be based on a criminal conviction. The second part of the test is forward-looking, in that it provides that the court must have reasonable grounds to believe that the terms of the order will prevent, restrict or disrupt involvement by the subject of the order in serious crime. Not only does that test have to be met before an order will be granted, but, in deciding what these terms should be, the court, as a public authority for the purposes of the Human Rights Act, will have to ensure that any term of an order is compatible with the convention rights. Thirdly, the Bill provides for numerous safeguards, most notably in relation to third parties who might be affected by the terms of the order. We have included comprehensive rights to make representations at proceedings when the granting of an order is considered, rights to apply for the variation or discharge of an order at a later stage, and rights to appeal. I believe that the provisions of the Bill are such that third parties will not be unreasonably affected by the terms of an order. Finally, we have taken much care to ensure that, where an order is sought against an organisation such as a company, the impact on legitimate business will be minimal. In the same way as for all other third parties, the applicant authority will have to bring the potential impact on third parties, such as business customers, to the court’s attention when they are considering the imposition of an order. I believe that these orders will provide a balanced approach to helping to deal with the very real harm caused by serious criminals to the communities in which we live. I look forward to discussing them in detail in Committee. The second main policy plank of the Bill is concerned with plugging a gap in the criminal law identified by the Law Commission, whereby a person currently incurs no criminal liability if he assists another to commit an offence that is not in fact committed, whereas he will incur liability if he gives encouragement in this situation. That is especially important with regard to serious crime, where we might be talking about supplying a car for the purpose of an aborted armed robbery, but it also applies across the whole of the criminal law. In implementing the very sensible changes suggested by the Law Commission, we will ensure that those who assist or encourage offences are held accountable for their actions regardless of whether an offence is actually committed or attempted. The offences are: encouraging or assisting an offence with intent; encouraging or assisting an offence, believing that an offence will happen; and encouraging or assisting a number of offences, believing that one or more offences will happen but without being sure as to which. In drafting these offences, we have taken into consideration the responses that we received to the consultation paper and the continued engagement with stakeholders. As a result, we are proposing some limited changes to the Law Commission’s recommendations. The Law Commission has confirmed that it is content with these changes and I hope that the provisions will meet with your Lordships’ approval. I take this opportunity to thank the Law Commission for the hard work that it has undertaken in this regard; the work has been very important and we are very grateful for it. The provisions are complex and technical in places, and I look forward to exploring them more fully with your Lordships in Committee when we examine the detail of the Bill. The third key area of the Bill is data sharing for the purpose of preventing fraud. If you were to ask the vast majority of the public whether that should be done, they would be shocked to discover that it was not already being done. This is why the overwhelming majority of the responses that we received to the consultation process for these proposals were supportive. There is something abhorrent about criminals seeking to enrich themselves on benefits and services that are intended for the more vulnerable members of our society—for example, those who claim housing benefits despite owning their own properties, sometimes several properties. It is the Government’s responsibility to provide the means for public sector organisations to protect themselves and the taxpayer against this activity. Our society has become increasingly dependent on the use of personal data for all our day-to-day personal and business transactions, including accessing services provided by the public sector, such as benefits or passports. However, the very existence of these many different systems across both the public and private sectors offers opportunities that criminals have not been slow to exploit. These are the opportunities that the new data-sharing measures are intended to spoil. This will offer savings to the private sector and the public purse. I should like to reassure your Lordships of one fact, which I hope will provide the context for discussion of these clauses today and in Committee. Every aspect of the sharing of data that will come about as a result of this legislation will be done in accordance with the provisions of the Data Protection Act. During development of this policy there has been a process of engagement, at official and ministerial level, between the Home Office and the Information Commissioner. As a result, the commissioner has indicated that he is content with the principles. I hope that your Lordships feel similarly able to support these provisions. It is fairly easy to see this type of fraud as ““victimless””, but that is far from the truth. The Home Office commissioned research by National Economic Research Associates; that research, which was published in 2000, estimated the cost of fraud in 1998 at up to £14 billion. This cost means that less money is available in the public sector for those who legitimately access public services, and its cost to the private sector is passed on to the UK customer. The frauds that these criminals commit may also be used to fund other serious crimes. The provisions of this Bill will enable the public sector to share information with the private sector, and vice versa. It offers the potential to help to identify individuals intent on defrauding the taxpayer by accessing benefits and services to which they are not entitled, and to prevent those applications from being granted where they should not be. This is not a broad gateway that allows any sharing of government information; rather, it is a narrow and targeted provision to prevent fraud. There are two distinct parts to what we are trying to do. First, we are talking about data sharing to enable public bodies to share information with the private sector through a specified anti-fraud organisation. Of course, no decisions have yet been made on which organisation or organisations should be so specified, but CIFAS, the UK’s Fraud Prevention Service, which is a non-profit-making organisation, provides a good example of the sort of body that the Government have in mind. The Bill provides a gateway for public authorities to join such a body if they wish. There will be no compulsion on them to take advantage of the gateway, but it will be there if they wish to use it. Such a mechanism will enable those bodies to risk-assess applicants for services on the basis of this information exchange. It is difficult to estimate the savings that may result for the public sector in taking part in a CIFAS-type arrangement, but they could be significant. The current members, of whom there are about 250, estimate that they have avoided losses of about £790 million in 2005. Pilot studies with some potential public sector members suggest that they could save between £137 million and £273 million in a year. The second element is to place the National Fraud Initiative on a statutory footing. This is a biennial data-matching exercise, which is already run by the Audit Commission as part of its auditing function and has already demonstrated its success. For example, in 2004-05, the National Fraud Initiative identified 905 housing benefit overpayments involving students and led to 396 successful prosecutions for housing benefit fraud. The initiative is already well established and operates to a code of practice, on which the Information Commissioner has been consulted, and that will continue to be the case. The data-sharing provisions in the Bill are, as I said, very much about providing the mechanisms. They do not go to the nature of the data sharing itself. That is for later, at the implementation stage. But at that stage, working with the Information Commissioner, we will be seeking to ensure that the arrangements are transparent and command public confidence, are proportionate and are subject to periodic review. Importantly, we will ensure that the provisions are used to target suspected fraudsters rather than simply those who are potential fraudsters. These are no more than elements of existing good data-sharing practice. I assure the House, too, that the Government intend to continue to adhere to them in promoting data sharing for the purposes of the prevention and detection of fraud. These two proposals on data sharing provide the means that the Government believe will, if enacted, have a real impact in preventing and detecting fraud in the public sector. I commend them to your Lordships. In recent years, we have made significant progress in recovering the proceeds of crime. The total amounts recovered have doubled since the Proceeds of Crime Act 2002 came into force to just under £100 million in 2005-06. If we meet this year’s target of £125 million, as we are on course to do, overall performance will have increased fivefold over the past five years. But we want to push on. We have therefore set a new target to double the current figure to £250 million per year by 2009-10. Not only is it right that we should not allow criminals to profit from the harm that they cause, but we must continue this success to prevent these proceeds from being a draw into serious crime and effectively a source of investment funding future serious criminal activity. As a result, we have reviewed the way in which criminal assets are recovered and have brought forward in this Bill proposals that will enable us to improve performance further. In order to bring work on the recovery of assets closer to the intelligence-gathering and investigative functions carried out by the Serious Organised Crime Agency, we have decided to merge the Assets Recovery Agency with SOCA. This will allow for easier sharing of information and intelligence and will maximise the skills and expertise of both agencies. The ARA has contributed to the total amounts recovered in recent years and has made a significant impact in disrupting serious criminal groups and freezing their assets. The Government believe, however, that more can be achieved, and the merger should enable further improvement. The ARA’s powers to bring proceedings in the High Court for the civil recovery of the proceeds of crime, under Part 5 of the Proceeds of Crime Act 2002, will be shared between SOCA and the main prosecuting bodies. The ARA’s powers to carry out certain taxation functions under Part 6 of the Proceeds of Crime Act will transfer to SOCA. The agency’s responsibilities for the training and accreditation of financial investigators will transfer to the National Policing Improvement Agency. There are further measures in the Bill designed to drive up our overall performance in this area. Three specific powers, which are already available to the police and Revenue and Customs officers under the Proceeds of Crime Act, will be extended to certain accredited financial investigators who operate under the Act. These are powers to: seize property to prevent its removal from the United Kingdom; seize and seek the forfeiture of suspect cash; and execute search warrants. The safeguards that currently apply when police and HMRC officers use the search and seizure powers under the POCA will similarly apply to accredited financial investigators. We are also creating a new type of investigation under the Proceeds of Crime Act; namely, a detained cash investigation. This new power, requested by law enforcement agencies, will help them in the preparation of a cash forfeiture case to go before the courts. The final part of the Bill reflects the increasing evidence of serious criminals attacking ex-Inland Revenue systems, now falling within Her Majesty’s Revenue and Customs, not just to evade paying tax on commercial profits but fraudulently to extract money from the Exchequer. The Bill makes certain surveillance powers that HMRC currently has only for serious crime in relation to ex-Customs and Excise matters also available to it for serious crime in relation to ex-Inland Revenue matters. This extension will allow HMRC more effectively to investigate and bring to justice those serious criminals engaged in, for example, organised tax credit fraud, involving identity theft and using false identities to make thousands of fraudulent tax credit claims; identity theft occurring in relation to self-assessment repayment frauds and organised attacks against this system by the internet filing of false returns; serious criminal gangs attempting to obtain large self-assessment repayments by using multiple claims; or suspects fleeing the jurisdiction. In the most serious cases, use of RIPA interception powers could be used to alert HMRC, providing early and invaluable intelligence and help to identify a suspect who is planning to flee the jurisdiction where the serious criminal activity relates to ex-Revenue matters. HMRC consulted on this change in March 2006. The majority of those who responded regarding the extension of these powers were in favour of what is proposed, provided that the powers can be used only in criminal investigations into serious tax crime and continue to be subject to the same safeguards and controls. I confirm that the safeguards and controls will be unaltered and that the powers will be used only for criminal investigations into serious tax crime. The use of the powers is also overseen by the independent Interception of Communications Commissioner and the Office of Surveillance Commissioners. None of that will change. These powers are not available for HMRC to use in exercising its routine civil compliance work—for example, tax inspectors checking that tax returns are accurate. Only the specialist teams that undertake investigations into serious tax crime may apply to use these powers. In conclusion, these provisions comprise a package that I hope your Lordships will agree will bring about real and appreciable improvements in the way in which we identify, investigate, prevent and strip the profits from serious crime. They build on a solid foundation of existing policy and on significant levels of support shown during the consultation process and from key stakeholders, such as the Information Commissioner. We are better able now to address these issues and I invite your Lordships to endorse the proposals, not least because they have been carefully framed and widely consulted on. We believe that the provisions in the Bill will potentially save us billions of pounds in the long term and represent a sensible way forward. I commend the Bill to the House. Moved, That the Bill be now read a second time.—(Baroness Scotland of Asthal.)