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Annabelle Ewing: I do not think such an instance will arise, but in what other circumstances—under Scotland, England and Wales or Northern Ireland law—are creditors put in such a preferential position?

Mr. Ainsworth: I do not pretend to be an expert. I never come to the Dispatch Box and claim to be an expert on insolvency, contract law, commercial law or anything else of that nature. But I know of no circumstances in which people are given such preferential treatment, which is why I have raised the issue of tax that is owed and the issue of fines. In neither of those circumstances are creditors given preferential treatment in the case of unsecured loans, but that is now being proposed in relation to confiscation.

As I have said, the amendments would 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 the proceedings. That would strongly deter the authorities from initiating cases, and would put a significant weapon in the hands of criminals seeking to disrupt their activities.

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We also consider the amendments wrong in principle, for a number of reasons. As we said in Committee, they have implications for a wide range of other debts to the Crown, such as unpaid taxes and fines. Although it was argued in another place that it was possible to distinguish between such disposals, there is no difference between them: they are debts to the Crown.

We have yet to hear a satisfactory explanation of how that objection can be overcome. The logical consequence of the amendments, if they are accepted, is the Government's establishing a scheme to transfer unpaid taxes, fines and other obligations to the creditors of those with outstanding loans which, as a result of an obligation, the debtor is unable to repay. We feel that no Government would ever accept such a principle. Nor is it clear to us why the enforcement authorities should be liable for the debts, given that the defendant's liability for a private debt is unaffected by the making of a confiscation order. The defendant should be obliged to pay the confiscation order and to honour the debt, which is what the Bill provides for.

Mr. Grieve: It seemed that the Minister answered his own question as he went along. He mentioned taxes and fines, and said that we should not contemplate the idea of taxes and fines being paid to a creditor, but I am sure that he will agree that we are not concerned in this case with taxes and fines. This is a completely new regime. The money that is being taken by the state is not being taken either as a tax or a fine. Indeed, in the civil context, it is a novel concept.

Mr. Ainsworth: The fact that it is a new concept hardly makes the hon. Gentleman's case. These are the proceeds of criminality. He appears to suggest that the proceeds of crime should be used to pay creditors. If someone were to steal my car, they should not use the proceeds to pay their debts, or be allowed to do so. Why on earth does he think that someone should be allowed to use the proceeds of crime to pay their debts?

Mr. Grieve: The Minister is being disingenuous. If his car is stolen and the money is used by a person, he will have a prior claim on that money. We have discussed this in Committee; we went round and round in circles. The point is that no one has a prior claim to a great many of the assets that are being confiscated. They are not a debt owing to the state. They are not a tax. They are not a fine. They are moneys that may have been acquired by a tremendous amount of sweat and labour by the person concerned. It just happens to have been tainted by criminality. That is the distinction. When implementing the new regime, we should have regard to the victims, who will be the unsecured creditors in this case.

Mr. Ainsworth: As I have said, the problem, which I hope the hon. Gentleman acknowledges, is that it would be easy to fabricate such situations, but I am not suggesting that the creditors are criminal in those circumstances. We do not encourage people to thieve to pay their debts, so why on earth should we allow people to pay their debts from property that they have stolen? I simply do not see the point. That is my fundamental objection in principle.

If the hon. Gentleman is to persuade the House to support the amendments from the other place, he will have to explain in great detail how on earth we would guard

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against the kind of abuses that would inevitably arise, rendering confiscation ineffective. Here is a second opportunity for the Opposition to prove the Prime Minister wrong and to support the Government on these much needed measures, which go to the heart of the Bill.

Mr. Davidson: I would be grateful if the Minister clarified what the effect of the Opposition proposals would be. Am I right in thinking that, if someone were charged but not detained on offences, and they would be likely to know whether they were guilty, they could easily decline to pay any credit card bills that they had outstanding and incur all sorts of expenditure? If the Lords amendment were passed, would that expenditure be met out of assets that would otherwise be seized? Is that the way in which the provision would operate? Surely there would be a perverse incentive to waste money—to spend money on meals and drink?

Rob Marris: These people could buy a Rolls-Royce.

Mr. Davidson: If they bought a Rolls-Royce, the Rolls-Royce would then be an asset that could be seized, but it would be difficult to get a meal or drink back. It is difficult to get a drink out of some of my colleagues at the best of times. After it had been consumed, it would be even more difficult.

Mr. Ainsworth: I do not know whether my hon. Friend falls into this category, but there are people who, for many different reasons, live constantly in a state of credit and debt.

There would be so many ways round the legislation if we accepted the amendments. If, because of the activities that they knew they were involved in, people had any suspicion that they might be threatened with a restraint order, they could ensure that their debts were always more than their assets, and so be free from any threat of confiscation. Alternatively, they could manufacture unsecured creditors after the fact, and it would be extremely difficult and massively time-consuming to prove that those creditors were not bona fide.

Earlier in the debate hon. Members complained that the Assets Recovery Agency ought to be two or three times the size that we envisage, and Members from Northern Ireland want there to be a substantial office over there. Is this what we want the Assets Recovery Agency to do? Do we want it to spend half its time trying to prove in court that creditors are not bona fide, or do we want it to get on with confiscating the proceeds of crime? I suggest the latter, so I ask hon. Members to vote against the Lords amendments.

Mr. Hawkins: We on the Conservative Benches feel that in part the Minister and his colleagues genuinely misunderstand the purpose of the Lords amendments, and in part, as we heard in the later part of the Minister's speech, they are overstating their response. May I make it clear, especially to Government Back Benchers, that the purpose of the amendments is only to prevent the creation of more entirely innocent victims of the Bill? To those who are worried about the idea of protecting the innocent little man, I shall quote from what Lord Goodhart said in response to the Minister in another place:

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In an extraordinary exchange between the Minister in another place—Lord Falconer of Thoroton—and the Opposition spokesmen there, the Minister suggested that innocent people could protect themselves from the legislation by "getting security", and putting themselves in the position of secured creditors. To his credit, the Under-Secretary has not argued that this afternoon. Both my noble Friend Baroness Buscombe and Lord Goodhart pointed out that it was ridiculous to expect small builders or plumbers to get security.

We are talking about the entirely innocent bona fide person with no knowledge that the small amount of building or plumbing work that he is doing might be for somebody who, although they appeared legitimate, later turned out to be on the receiving end of a confiscation order.

When these matters were being debated in another place—the amendments were eventually carried by a substantial majority—Lord Goodhart said:

We accept entirely the Minister's case against the creation of bogus debts, but if he consults those who advise him, he should accept that the courts are well used to analysing whether debts are bogus. If it is made clear, as was the intention when the amendments were agreed to in another place, that their purpose is only to protect the entirely innocent, such as the small builder or small plumber that I have talked about—

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