Select Committee on Public Accounts Minutes of Evidence

APPENDIX 1

Supplementary memorandum submitted by Sir Hayden Phillips GCB, Permanent Secretary, Lord Chancellor's Department

Question 16: Why should it be that the cancellation rate should be several hundred % higher in some areas than others? Why is West Yorkshire failing?

  The high cancellation rate in West Yorkshire is due to an initiative to bring to a conclusion old legal aid accounts, particularly in the Leeds district. The accounts have a significant impact on West Yorkshire's outstanding arrears figure. There has been much work undertaken to obtain from the Crown Court and the Law Society the documentation needed before the accounts can be enforced. Where it has not been possible to obtain documentation, the court has cancelled the accounts. The initiative is ongoing and will result in a high cancellation rate in West Yorkshire for some time to come.

  West Yorkshire operate a centralised finance unit and so they are only able to provide a breakdown of cancellation rates on a district basis rather than by individual court sites.

%	Jun 2000	Sep 2000	Dec 2000	Mar 2001	Jun 2001	Sep 2001	Dec 2001	Mar 2002
Leeds	31.1	19	22	34.5	130.6	24.2	26.6	108.2
Bradford	35.8	24.6	45.2	30	30.8	34.6	68.5	35.8
Calderdale	10.1	19	24.8	32.5	20.8	24.1	33.9	27.4
Kirklees	33	33.3	29.7	33	30	39.1	26	28.5
Wakefield	37.3	33.7	37.3	44.1	26.1	66.9	37.1	41

Question 29: In the meantime do you think it would be a good idea for somebody centrally, probably yourselves, to give some kind of guidance to magistrates' courts in such eventualities [foreign nationals not paying fines] to avoid this kind of situation arising in the future?

  Mr Trickett mentioned (Qq 22-29) a case that had arisen in his constituency where a £500 fine was imposed on a French lorry driver who subsequently returned to France without paying the fine. He asked what enforcement options were open to the court pending the conclusion of EU negotiations on a draft Framework Decision, which would provide for financial penalties in one Member State to be enforced in another Member State. He also asked that the Lord Chancellor's Department (LCD) issue interim guidance to the courts to prevent such a situation arising in the future.

  As I explained at the hearing, there is at present no means for an English court to directly enforce a fine on a foreign national who then returns home. However, it is because of the comparative weakness of the current provisions on mutual co-operation that the UK, France and Sweden have proposed a draft Framework Decision based on Articles 31(a) and 34(2)(b) of the Treaty on European Union. This will provide for financial penalties imposed in one Member State to be enforced in another Member State. I understand that it was intended that this should be agreed this summer, but this now looks unlikely as a number of issues remain unresolved. UK implementation should occur up to two years after agreement is achieved.

  In the interim, a Home Office working party (the Fixed Penalties Procedures Working Group) is currently exploring options such as the feasibility of introducing a system of fixed penalties, or a graduated deposit system, whereby the haulier would pay a "deposit" as a guarantor of court attendance (should the operator/driver fail to attend court, the deposit would automatically be forfeited to the Exchequer).

  Finally, further enquiries have produced new information on which I had not been briefed at the time of the hearing. EU Regulations and Directives governing international road haulage operations contain a standard provision requiring mutual co-operation between member states in ensuring that hauliers comply with the road traffic legislation of countries in which they operate. In circumstances such as those described by Mr Trickett, the court, having been unable to enforce a fine against a foreign national, may write to the Department for Transport (DFT) giving details of the offence and the penalty imposed. The DFT then immediately passes this information to the transport department in the country of origin, urging the host nation to take all necessary steps to ensure that the fine is paid. About 18-20 such requests are processed by DFT each year.

  I shall ensure that the courts are reminded of the availability of this option, and I shall ask the Criminal Enforcement Policy Advisory Group to consider (in liaison with DFT) what further advice might be offered to the courts.

Questions 31-32 and 38: Why is there no incentive to encourage people to pay quickly? Is it something you have looked at?

  The White Paper Justice for All, which sets out proposals for reform of the Criminal Justice System, contains proposals for improving fine enforcement, including the introduction of a discount for prompt payment of fines in line with agreed terms and to increase the fine if the defendant fails to pay on time. There are also proposals to provide fines officers with statutory powers which will enable them to impose a range of sanctions for fine default including: registering the fine with the registry of judgements (which prevents defaulters obtaining credit); ordering the clamping of a defaulter's vehicle, which could be sold if the fine was not paid; authorising bailiffs to seize defaulter's goods; or ordering deductions to be made from defaulter's pay or benefits. There will be a right of appeal against fines officers' discretionary decisions and appropriate safeguards for those who are genuinely unable to pay.

Questions 73-76: What proportion of the 37% of fines which are not collected is represented by those people who are on benefit and have already had three attachments of benefit? What proportion of defaulters in the 37% cent are on benefit?

  As was indicated in the parliamentary answers to Mr Gibb (HC Deb, 12 July 2002, col 1225W-1226W) this information is currently not collected centrally by LCD or the Department for Work and Pensions (DWP), but we are examining whether it would be possible by research or sampling to estimate the data requested. The table below, provided by DWP, shows numbers of Income Support/Job Seekers Allowance (Income Based) claimants at a point in time each year since 1994, with a deduction in force on their benefit for fines recovery.

Year	IS Claimants (1000's)	JSA (IB) Claimants (1000's)
May 1994	7	—
May 1995	9	—
May 1996	16	—
May 1997	14	8
May 1998	13	7
May 1999	13	6
May 2000	12	5
May 2001	13	4
Feb 2002	14	4

Questions 103-107: How many people who have received community service orders have had their sentence written off and been told that they do not need to serve it?

  The number of community punishment orders (formerly community service orders) which terminated before completion of the order in each year since 1995 in England and Wales was as follows:

Year	Number
1995	14,700
1996	14,400
1997	13,400
1998	12,700
1999	12,300
2000*	13,500

  * Latest year for which complete information is available.

  It may be that the Committee was referring to breach warrants which have been withdrawn by the courts, in which case the only data available is from April 2001 (when MCCs took responsibility) to end February 2002. In that period 25,728 warrants were issued, of which 2,591 (or 10% ) were withdrawn. Reasons for these being withdrawn include convictions for other offences, new information coming to light (the offender now in prison) or that the offender has disappeared without trace. The PAC transcript refers at Q 102 to a breach rate of 30%. That of course is not the same as a 30% failure to enforce such orders. Only a small proportion of breaches result in a warrant being issued and only a proportion of those end up being withdrawn.

Question 124: What exactly is going on with this additional money other than buying stand-alone systems, which is probably quite a waste of money because in 18 months' time a completely new system will be available?

  The spreadsheet at Annex A indicates what the money available through the pilot netting-off scheme will be spent on.

Question 144: Could you say something about other international comparisons, what they do in various states in the United States, what they do in Europe? Is this an endemic problem in all western criminal justice systems or have other countries found ways?

  We have looked for successful criminal enforcement models throughout the world and those which seemed to have the most potential are the recently reformed systems in New Zealand and the Australian States, especially as they were reforming systems which resembled our own. We therefore looked at the lessons which can be learned from those jurisdictions. Details of these systems can be found at:

http://www.courts.govt.nzi

http://www.lawlink.nsw.gov.au

http://www.justice.wa.gov.au

http://www.courts.sa.gov.au

http://www.fru.nt.gov.aul

  The experience of reform of fines recovery in New Zealand is examined in more depth in two publications in a series of case studies about innovations in New Zealand's public sector by Victoria University of Wellington through Victoria Link Ltd. These are:

Criminal or Customer? Creating New Ways of Collecting Court Imposed Fines (1998); and

Anchoring Change. A case study of the Collections Unit, Department for Courts, illustrating why organisational change programmes can take several years to deliver results, and showing how one business managed to anchor the changes it set out to achieve (2000).

  Copies of both publications can be obtained from the School of Business and Public Management, Victoria University of Wellington.

Question 152, 183 and 228: Could we ask you to give us a supplementary note of the ten starred courts who are the best at collecting money . . . can you explain why the payment rate in Staffordshire is 90%, whereas in Surrey it is only 58% . . .?

THE 10 BEST PERFORMING MAGISTRATES COURTS COMMITTEES

  Payment rate (defined as the amount paid into court as a percentage of new amounts owed) April 2001-March 2002

1	Dorset	89%
2	West Yorkshire	86%
3	Surrey	79%
4 =	Cumbria	76%
4 =	Lincolnshire	76%
6 =	Durham	75%
6 =	Essex	75%
6 =	North Yorkshire	75%
6 =	Thames Valley	75%
10	Norfolk	74%
	National Average	59%

THE 10 POOREST PERFORMING MAGISTRATES COURTS COMMITTEES

  Payment rate (defined as the amount paid into court as a percentage of new amounts owed) April 2001-March 2002

42	Merseyside	34%
41	Cambridgeshire	36%
40	South Wales	40%
39	Gloucestershire	43%
37 =	Warwickshire	46%
37 =	Greater London	46%
36	West Mercia	48%
35	Northamptonshire	52%
33 =	Cleveland	54%
33 =	Avon & Somerset	54%
	National Average	59%

  The payment rates quoted in Q 183 refer to the year 2000-01.

  The ranges of debt analysis returns from MCC areas for 2001-2 were:

Payment Rate: from 89% to 34%

Cancellation Rate: from 3% to 52%

Write-off Rate: from 1% to 32%

COMMENTARY ON CURRENT PERFORMANCE

  Lead responsibility for warrant execution was only transferred from the police to MCCs on 1 April 2001, thereby giving MCCs control over the whole enforcement process. A major factor that will have added to the range of results for their first year of responsibility for this work is the local position each MCC area inherited from the police. The transfer came about because of the continuing problems that the police had with this type of work. It is therefore early days for the MCCs and greater consistency should come about once the new system beds down.

  Many MCC areas are still struggling with the backlogs inherited from the police (over 100,000 in total, ranging from none in Gloucestershire and Leicestershire to 25,000 in Greater London Magistrates' Courts Authority). Inevitably, the ability to be able to enforce those warrants, or the need eventually to deal with them by way of write-off or through an application and judicial cancellation will vary considerably. Responsibility has only been with the MCCs for just over one year.

  There are also variations in the method of enforcement employed by each MCC ranging from in-house civilian enforcement officers to approved enforcement agencies and contracting the work back to the police. From analysis so far, no one of these approaches has proved more or less successful in increasing an individual MCC's payment rate. There is also no correlation between areas as both metropolitan and rural MCCs have both varying high and low levels of payment rates.

  Other factors have also emerged. For example, the reason for the highest cancellation rate is in fact due to an initiative in West Yorkshire to bring to a conclusion old legal aid accounts, which are having a significant impact on their outstanding arrears figures.

  It is also worth emphasising that the cancellation of a debt is a judicial function, and it appears that benches across the country vary in the frequency with which they employ this power to deal with unsatisfied debt which includes not only fines but also fees, compensation, confiscation orders, legal aid contributions and some maintenance orders.

  The vast majority of write-offs occur because the offender has moved home and cannot be traced. The problem of tracing offenders can be compounded by the fact that some are highly mobile and either deliberately or inadvertently fail to notify the courts when they change address. To address this problem, the Government took powers in the Access to Justice Act 1999 to enable the courts to seek information from other Government agencies on the whereabouts of offenders. A national arrangement with the Department for Work and Pensions was implemented in April 2001 to coincide with the transfer of responsibility for warrant execution. The DWP database covers 100% of the population, and contains 83 million records. The initiative has been very successful; over 171,000 requests for information were processed by DWP during the first year of operation, and nearly £465,000 was recovered that would otherwise have been written off as unenforceable.

  The Department is assisting MCCs to share good practice in enforcement through:

(i)  holding regional conferences in April 2002 , which enabled delegates to share good practice, to discuss problems and find solutions. Researchers working on the Home Office research into fine enforcement made presentations on their findings at the conferences; and

(ii)  the establishment of the Criminal Enforcement Policy Advisory Group (CEPAG) which will be tasked with exploring and evaluating good practice initiatives, revising and updating guidance and taking forward other issues arising from the conferences to improve enforcement. The first meeting is planned for 24 July.

WHY THERE ARE SUCH LARGE VARIATIONS IN PAYMENT RATES

  Establishing a reliable measure of payment of financial penalties is not straightforward—largely because many impositions are not settled in full at a fixed point, but instead are settled over a period due to payment by instalments. While at first sight it is simple enough to say "X owed Y a total of £Z, and only 50% was recovered", in aggregate terms it is more complex. The convention is to use the payment rate, which provides a snapshot of the amount paid into court as a percentage of new amounts owed in a given period. While the payment rate is the best performance measure we have, a number of factors affect performance:

—  differences in the characteristics of defaulters—a point made in paragraph 1.6 of the NAO Report. (HO research suggests that those offenders from the poorest neighbourhoods are significantly less likely to pay their financial penalties than those from more affluent areas. Courts with low recovery rates tend to have a higher proportion of their offenders living in poorer neighbourhoods, and needed to take more enforcement actions against a greater proportion of their offenders. Such courts had a significant proportion making no payment whatsoever);

—  differences in the type of offences for which fines are imposed in the first place eg if there is a high proportion of fixed penalties or relatively small traffic fines these are more likely to be paid off quicker than other fines. If an MCC is in an area with a busy motorway running through then this may be a factor compared to other areas;

—  the ease with which offenders can be traced (it can be far more difficult to trace offenders in areas with a high proportion of temporary or bed and breakfast accommodation);

—  the proportion of persistent offenders (who can rack up large debts, and who often know how to play the system);

—  the effectiveness of local enforcement methods;

—  transfers of fines. Small town or country courts are often able to transfer out large numbers of cases because defendants live outside their areas. Normal practice is to accept payment when it is made on receipt of a fines notice even if the offender resides outside the courts' jurisdiction. Fines are therefore transferred only if requiring enforcement. Net importers of fines will therefore have to perform more enforcement process than those areas which are net exporters. This will affect the cost of enforcement, arrears figures and the number of difficult cases the courts have to deal with;

—  if the rate at which money is paid into the court remains stable at a time when fine impositions happen to fall, the proportion of debt to impositions will appear greater; and

—  distortions created by large impositions, payments and large arrears.

VARIATIONS IN WRITE-OFFS

  A number of factors may cause variations in write-off rates:

—  the socio-economic make up of the population served by the court, which can affect the chances of successful recovery;

—  the nature of the offences (defendants in some motoring cases appear to be more likely to pay);

—  sentencing policy—magistrates using their discretion to set a fine at a lower level will see a higher proportion paid, and less written off, than those who set fines high, even if the amount of money collected is the same; and

—  the policy of the MCC regarding the enforcement measures that must be attempted before write-off will be authorised.

  While a continuously high write off rate might indicate poor enforcement, a very low write off rate might mask administrative inefficiencies in clearing unenforceable debts. An aberrant high rate may be indicative of distortions caused by writing off large impositions, or as a result of a `purge' on unenforceable debts.

CANCELLATIONS

  Accounts which are required to be closed by law or by a decision of the courts are generally referred to as `cancellations'. These are not included in the write off figure. Neither do cancellations necessarily arise from a failure in enforcement.

  Cancellations arise in the following situations:

—  Committal of the offender to prison upon default;

—  `Lodgement'. (A defendant can apply to have his/her fines `lodged' while already serving a term of imprisonment for another offence. The court must decide if the term/s are to be served concurrently or consecutively to the existing sentence. The effect of this is that upon release the defendant faces no further financial obligation to the court);

—  Remission of the imposition. (The court may at any time remit the whole or any part of the fine, but only if it thinks it just to do so having regard to a change of circumstances which has occurred since the date of the conviction);

—  Setting aside of conviction and sentence;

—  Successful appeal against the imposition;

—  Compensation being no longer payable following a review by the court; and

—  Statutory declaration. Section 14 of the Magistrates' Courts Act 1980 enables the accused to make a statutory declaration, at any time during the life of a case, that they did not know of the summons or proceedings until a date specified. This has the effect of all the proceedings and any other order of the court (including any financial obligation to the court) being void. This procedure would be used, for example, if a fixed penalty notice was issued in error to the registered owner of a vehicle when that vehicle had in fact been sold on to the person who committed the offence.

Question 169-172 and 263: Why does it take three years to do a research project on the enforcement of financial penalties? . . . that research work was due to report in early 2002. Now you have told us . . . it will be later this year. Can you explain why this delay is happening?

  This project started in late 1999 (with funding from the government's Crime Reduction Programme). The researchers were appointed after a competitive tender. Their first task was to identify promising issues in fine enforcement to be pursued at the pilot stage. Once this was done, 20 courts were selected to take part in the research. The researchers carried out a pre-implementation data gathering exercise to get detailed baseline data on the use of financial penalties and enforcement practice at those courts.

  The courts then bid for funding to run particular pilot schemes, the subjects of which mapped onto the areas identified initially by the researchers as potentially promising. The pilots themselves ran in the first 6-9 months of 2001.

  The researchers then gathered the post-pilot data on the effects of those initiatives. They produced a first draft of their final report, to time, by November 2001. A second draft taking account of comments from the project's steering group was produced in January 2002. However, we then took the decision that the researchers should concentrate on producing a short summary report aimed specifically at practitioners in time for the LCD enforcement conferences in April. Both the researchers and the Home Office (HO) staff participated in the planning for these conference and the researchers gave a presentation on the research at each of the five conferences.

  This took us to May this year. The researchers then re-started work on the final draft of the study's full report, which is due to be submitted in mid-July and published at the end of the month.

  In the circumstances I hope you agree that two years (from issuing of the Invitation to Tender to receiving a first draft of the final report) to produce such a substantial piece of innovative research (which actually empirically tests the effects of various promising-looking enforcement strategies) is reasonable.

  I also undertook to send Mr Rendel details of the key points in the research, and I enclose a copy of the Home office Development and Practice Report Fine Enforcement in Magistrates' Courts which was published in April and disseminated to MCCs at the regional enforcement conferences sponsored by LCD. The main lessons for magistrates and for enforcement and other administrative court staff are summarised on pages 4 and 5 of the booklet.

  I shall, of course ensure that a copy of the full research report is placed in the libraries of both Houses on publication. As I explained at the hearing, this is expected to be later this month.

Questions 201-202: Apparently there were some pilot schemes . . . where people who had not paid their fines were given community punishment orders, curfew orders and driving disqualification. How many were actually administered? For example in Norfolk and Greater Manchester how many community punishment orders were there and how many curfew orders were given and how many people were disqualified for driving?

  The new measures for fine defaulters, persistent petty offenders and others were fully evaluated in the Report of the Crime (Sentences) Act 1997 Pilots by Robin Elliot and Jennifer Airs of the Home Office Research, Development and Statistics Directorate, which was published in 2000 (ISBN 1 84082 415 8).

  Copies of the Report may be obtained from the Home Office, Information and Publications Group, Research, Development and Statistics Directorate, Room 201, 50 Queen Anne's Gate, London SW1H 9AT. Telephone [phone].

Question 236: I should be grateful if you could just check . . . whether you do have guidance in place which says that all the information available about an offender and the situation in court should be transferred to the other[transfer of cases between courts]?.

  The Enforcement of Financial Penalties Working Group issued guidance in 1996, which covered the transfer of fines between MCC areas. The guidance (which reiterated guidance previously issued by LCD in September 1992, recommended that:

"where a Transfer of Fine Order is made, a record of the enforcement action taken to date (if any), together with a note of any evidence recorded at a means enquiry and any responses from the offender, should be forwarded with the Order to the receiving court."

  The protocol agreed between MCCs and the Department for Work and Pensions in respect of the information sharing regime that was put in place on 1 April 2001 makes it clear (paragraph 31) that:

"if an MCC finds that the person for whom they have requested an up-to-date address has moved to an area served by a different MCC, the fine may be transferred to the MCC where the offender now resides. For this purpose, the original court can inform the new court of the defaulter's address, as disclosed by the DWP."

Question 240: If somebody who has been charged writes in to say that they intend to plead guilty to the charge but they do not want to have to attend the court . . . they will presumably in most cases normally be expecting a fine. Are they then asked how they will pay the fine before the court convenes?

  An inter-agency working group convened by a member of Her Majesty's Magistrates Courts Service Inspectorate is currently devising a recommended standard means enquiry form to be issued to defendants with their summonses. The form is for use by the court when considering the defendant's financial circumstances and ability to pay when the fine is set, and by defendants when requesting time to pay the fine. The group will consider the inclusion of a question on preferred payment method although methods available vary across MCC areas and the defendant would need to know what was available locally.

Questions 253-254: Is it possible to provide a note on [whether victims or witnesses fail to turn up because they felt there was no point as offenders might not pay any penalty]?

  We do not have any evidence to support the assertion that the belief that an offender will only receive a fine, which might not then be paid is deterring witnesses and victims from coming forward. We have evidence, from the National Witness Satisfaction Survey, only of the views of victims and witnesses on the fairness of the verdict. Of those asked, 64% thought the verdict was fair but this survey takes samples only from those witnesses who do attend court.

  The National Witness Satisfaction Survey 2002 is currently being carried out. The question on the fairness of the verdict has been supplemented by a question on the fairness of the sentence. The same caveats, however, will apply to the responses received.

Sir Hayden Phillips GCB

Permanent Secretary

Lord Chancellor's Department

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Prepared 27 November 2002