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Lord Commissioner of Her Majesty's Treasury (Mr. John Heppell): I beg to move,
That the Order of the Committee this day be amended in paragraph (1)(b) by leaving out ''9.25 am'' and inserting ''9.10 am''.
This is a slight amendment to the resolution of the Programming Sub-Committee. We had a request from Opposition parties. I consulted Opposition Members and they are happy with the proposal. The amendment would make the starting time of the morning sitting 9.10 am instead of 9.25 am.
Question put and agreed to.
Mr. Mitchell: I beg to move amendment No. 4, in schedule 1, page 120, line 28, leave out from '9)' to end of line 29 and insert—
'(1A) The Director General shall appoint such staff for SOCA as he considers necessary for the discharge of its functions.'.
The Chairman: With this it will be convenient to discuss the following amendments: No. 161, in clause 6, page 4, line 27, at end insert—
'(b) the financial resources expected to be available to SOCA for the financial year,
(c) SOCA's proposed allocation of those resources;'.
No. 162, in clause 6, page 4, line 39, after first 'to', insert
', and the financial resources required to,'.
No. 1, in clause 18, page 10, line 36, leave out from 'determine' to end of line 37 and insert
'but not later than one month after the beginning of the financial year.'.
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No. 2, in clause 18, page 10, line 38, leave out subsection (3).
No. 3, in clause 19, page 11, line 2, after 'must', insert
'make an assessment of the funding SOCA requires in order to fulfil its annual plan and, in the light of that assessment, must'.
No. 160, in clause 19, page 11, line 4, leave out subsection (2) and insert—
'(2) A determination under sub-section (1) must specify a single amount in respect of three financial years.'.
Mr. Mitchell: I thank the usual channels for, as ever, looking after the interests of the Committee.
The amendments form the third part of the principal point that we wish to make about this part of the Bill. Amendment No. 1 would make it clear that the Serious Organised Crime Agency will receive funding at a specified and certain time, amendment No. 2 would remove the power of the Home Secretary to ring-fence funding, and amendment No. 3 would make it clear that SOCA will be adequately funded and that the funding decision will be based on requirements set out by the director general of SOCA. Clause 19 sets out how the financial position of SOCA will be determined, but we are concerned that there is no reference to how the financial requirements of SOCA will be assessed. The amendments would ensure an assessment of the costs and objectives of the annual plan. I reassure the Minister that the Opposition are trying to probe whether there are adequate safeguards to ensure that the financing of the agency cannot be used in a political manner.
We would like the Minister to comment on six key issues. First, the Government have not been clear about the exact sums of money that will be needed to set up SOCA and run the agency: there are key variables that have not been focused upon and costs that have not been clearly determined. Secondly, we want to remove from clause 18 the power of the Secretary of State to ring-fence funds. Thirdly, we would amend clause 19 to ensure that there is an assessment of the costs of the objectives of the annual plan. Fourthly, we want the action plan written by SOCA to contain references to the financial resources that will be required to fulfil the objectives outlined in the action plan. Fifthly, a three-year financial cycle would give SOCA the financial stability to plan ahead and to ensure that investigations do not have to be cut short—or at least to ensure that there is no risk that investigations might be cut short because of funding shortfalls. Sixthly, and finally, we want to amend the Bill to ensure that the director general of SOCA is able to appoint the number of staff necessary for the discharge of his functions. SOCA needs to have enough staff to operate efficiently. The history of staff shortages that affected the NCS must not be repeated.
First, SOCA is to be allocated no new money on its formation apart from an initial grant in the first year of £27 million. The Government have still not pinned down exact numbers for key variables, such as staff and technology costs, but they have clearly stated that SOCA will have the same running costs as its
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component agencies. The Government have not stated that there will be any increase in real-terms funding in 2007-08—indeed, in theory SOCA might, under the terms of the Gershon recommendations affecting non-departmental public bodies, have to cut staff. We seek an assurance from the Minister that that will not be the case. No extra money has been allocated for 2007-08 to accommodate year-on-year increases such as the cost of living allowance and staff pay increases. No extra money has been allocated for additional capital expenditure. By its very nature—the Minister has made this point—SOCA will deal with sophisticated criminals using technologically advanced equipment and techniques. If SOCA does not have the capital to invest in new technology to stay ahead of the criminal networks, the agency will clearly not be able to succeed.
Given the inconsistency and lack of exact figures, it is not surprising that one of the concerns about the establishment of SOCA is that it could lead to the top-slicing of police force budgets. Funding for SOCA will come from the central Home Office allocation, so it is not surprising that police forces fear that money could be taken from their budgets to fund SOCA. We seek an undertaking that there will be no plundering of police force budgets and hope that the Minister will reassure us on that point.
Secondly, if one thing is likely to ensure that SOCA's operations comply with a political agenda, it is the ring-fencing of its grant. We have seen that in other areas of policing. How will SOCA be able to avoid politicisation if the spending of its grant is subject to and determined by a set of terms and conditions from the Home Secretary? The Opposition are absolutely opposed to the Government's obsession with ring-fencing funds to public services, because it has an entirely negative impact by stifling organisations and removing the flexibility that they must have to achieve operational independence. It would be quite feasible for the Secretary of State to set SOCA's entire agenda by compartmentalising its funding and specifying the types of operations and resources to which funding can be allocated. We are opposed to that. The Secretary of State could ring-fence the entire grant to placate and ingratiate himself with certain sections of the electorate, without paying any attention to actual serious organised criminal activity within the UK, on which SOCA's board will advise him. In fact, clause 18(3) states:
''The Secretary of State may, if he thinks fit, make any payment of grant under this section subject to conditions.''
That is an extreme example of micro-management and removes any guise of operational independence that the director general of SOCA may have been given in clause 22. We seek assurances in that respect.
Thirdly, we seek to amend the Bill to give SOCA further financial stability by ensuring that the grant is made to SOCA on a three-year financial cycle. The Government have been sympathetic to that proposition in other areas. Financial stability and clear financial planning are vital to SOCA's effective operation. SOCA would not be able to complete investigations if funding ceased owing to shortfalls and budget cuts. Giving SOCA its grant every three years
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would also appease police forces' fears that their budgets would be top-sliced in the manner that I described. In clause 19(2), the Government merely offer the possibility that the Secretary of State may, if he thinks fit,
''specify a single amount in respect of two or more financial years.''
However, clause 19 offers no reassurance to SOCA. Do the Government envisage the Secretary of State using that provision as negotiating tool? Will SOCA be offered a variety of budgetary packages for different time scales? Will the Secretary of State offer the longer-term financial grant but only with strings attached, or will he make the sensible decision to set SOCA's grants over a longer period of time, to allow for financial stability?
Clause 19 is a welcome step in the right direction from the Government, as it has long been felt that grants should be made in financial cycles of longer than one year in order to assist financial planning. However, clause 19 as it stands merely flirts with the necessary commitment. In the case of SOCA, that commitment is an operational must. With a clear financial position SOCA will be able to take on more cases with the confidence that it will be able to complete them more quickly and more effectively.
Turning to points four and five, clause 19 sets out how the financial provisions of SOCA will be determined, but no reference is made to how its financial requirements will be assessed. The Secretary of State can make an entirely arbitrary decision. Under clause 19(7) the Secretary of State ''may require SOCA'' to provide him with information upon which he will base the financial grant. That places the onus solely on the Home Secretary and does not require him to gather any information from SOCA upon which he will base such a decision. We would amend the Bill to ensure that there is a clear assessment of the costs and objectives of the annual plan. We also want SOCA to be able to include in its annual plan the financial resources that would be required to fulfil the objectives of that plan.
The drafting of the Bill is unusual in that the amount of the financial grant is to be determined wholly at the Secretary of State's discretion. There is no precedent for that in the Acts that established the funding mechanisms of the NCS or NCIS. Sections 110 to 114 of the Criminal Justice and Police Act 2001 specified that NCIS and the NCS service authorities were to prepare annual budget statements that set down the required funding for the next financial year, and the Secretary of State would allocate the financial grant to those organisations based on that information. The NCS and NCIS therefore had the opportunity to make their financial requirements clear to the Secretary of State. A similar mechanism is in place for the director general of the Assets Recovery Agency to outline the agency's financial requirements based upon the objectives outlined in its annual plan. Schedule 1 to the Proceeds of Crime Act 2002 specifies that the director of the agency must, before the beginning of each financial year apart from the first prepare a plan setting out how he intends to exercise his functions during the financial year. That is an annual plan
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similar to the one that SOCA is required to prepare. The schedule goes on to state that the annual plan must include his priorities for the financial year, the financial resources expected to be available to him for the financial year and his proposed allocation of those resources. There is no such specification in clause 6 in relation to SOCA's annual plan. Our amendment is designed to redress the balance by ensuring that the Secretary of State bases his assessment for SOCA's financial grant on the annual plan, which will contain references to SOCA's financial requirements for the coming financial year.
Finally, we want to ensure that the director general of SOCA is able to appoint the number of staff necessary for the discharge of the agency's functions. We also hope that our amendment requiring that SOCA outline its forthcoming financial needs will ensure that the resources required to start SOCA effectively are spelled out clearly to the Secretary of State. SOCA must have enough staff to operate efficiently and to put the fear of God into the perpetrators of serious organised crime in the UK. It is currently speculated that SOCA will be staffed by 4,500 to 5,000 officers taken from the various component bodies. It is vital that resources be provided to resource the agency properly to deal with organised crime. Historically, NCS has been understaffed. In the 2003-04 annual report of the NCS, Bill Hughes, then its director general, said,
''We have been under strength this year. This in itself is a critical weakness.''
He added,
''Last year, fewer people bore more strain as a result of a shortfall in staff.''
We do not want to see the maximum effort being put into establishing SOCA, only to find that the Government are unwilling to provide the financial support necessary and the director general is unable to recruit the number of officers and staff required to run the agency effectively.
This is a sensible and moderate set of probing amendments. We hope that the Minister will either accept them in whole or in part, or reassure the Committee and, more important, those outside who have raised these important points, that they are unnecessary.
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