The
Committee consisted of the following
Members:Chairmen: †
Mr.
David Amess,
Mr.
Martyn Jones †
Brown,
Lyn (West Ham) (Lab) †
Campbell,
Mr. Alan (Lord Commissioner of Her Majesty's
Treasury)†
Cox,
Mr. Geoffrey (Torridge and West Devon)
(Con) †
Cunningham,
Mr. Jim (Coventry, South)
(Lab) †
Fabricant,
Michael (Lichfield)
(Con) †
Grieve,
Mr. Dominic (Beaconsfield)
(Con) †
Gwynne,
Andrew (Denton and Reddish)
(Lab) †
Hands,
Mr. Greg (Hammersmith and Fulham)
(Con) †
Heath,
Mr. David (Somerton and Frome)
(LD) Hunter,
Mark (Cheadle) (LD) †
Johnson,
Ms Diana R. (Kingston upon Hull, North)
(Lab) †
Lucas,
Ian (Wrexham)
(Lab) Mullin,
Mr. Chris (Sunderland, South)
(Lab) †
O'Brien,
Mr. Mike
(Solicitor-General)†
Snelgrove,
Anne (South Swindon)
(Lab) †
Sutcliffe,
Mr. Gerry (Parliamentary Under-Secretary of State for the Home
Department)†
Wright,
Jeremy (Rugby and Kenilworth)
(Con) Mr. G Clarke, Committee
Clerk † attended the
Committee Standing
Committee
BTuesday
20 June
2006(Morning)[Mr.
David Amess in the
Chair]Fraud Bill [Lords]
The
Solicitor-General (Mr. Mike O'Brien): I beg to
move,
That— (1)
during proceedings on the Fraud Bill [Lords] the Standing
Committee shall (in addition to its first meeting at 10.30 a.m. on
Tuesday 20th June) meet-
(a) at 4.00 p.m. on Tuesday
20th June; (b) at
9.00 a.m. and 2.00 p.m. on Thursday 22nd June;
(2) the proceedings shall (so
far as not previously concluded) be brought to a conclusion at 6.00
p.m. on Thursday 22nd June'.
We look forward to a good
debate during the course of the Bill under your wise chairmanship, Mr.
Amess.
Mr.
Dominic Grieve (Beaconsfield) (Con): May I welcome you to
the Chair, Mr. Amess? I suspect that the Committee may be passed in
such harmony that our debates may be even briefer than we expect.
However, we will have an opportunity for some serious consideration of
the Bill. Although the Opposition do not much care for programme
motions, this one is sufficiently innocuous as to not merit too much of
my
attention. Mr.
David Heath (Somerton and Frome) (LD): Mr.
Amess, may I also welcome you to the Chair? My suspicion is that the
Committee will be a good-tempered, intelligent and well-argued one. It
is a pleasure to deal with Home Office or home affairs business that is
not as contentious as we have done on occasion.
There is general agreement that
the Bill has merit but there are details that we will wish to explore
in depth. However, I suspect that the programme motion, for once, gives
us adequate time to deal with the niceties of matters before us. There
is no need for me to delay the Committee further, other than to say
that I know my hon. Friend the Member for Cheadle (Mr. Hunter) is
simultaneously serving on another Standing Committee on the Company Law
Reform Bill. Therefore, although I will welcome my hon. Friend’s
presence, I understand the essential dichotomy that faces him in being
a member of two Committees at the same
time. Question put
and agreed
to.
The
Chairman: Presumably, at some stage, the weather will get
warm. If Members wish to remove clothing, within reasonable limits,
please do so. If anyone has a complaint about any matter, if they would
kindly see us, we will do something about it.
I remind
Members that adequate notice should be given of amendments. As a
general rule, I and my fellow Chairman, Mr. Martin Jones, do not intend
to call starred amendments, including any starred amendments that may
be reached during an afternoon sitting of the
Committee.
Clause
1Fraud Question
proposed, That the clause stand part ofthe
Bill.
The
Solicitor-General: Mr. Amess, it is a pleasure to
introduce clause one, which introduces the new general offence of
fraud. It establishes the three ways in which the offence can be
committed. These are fraud by false representation, failing to disclose
information and abuse of position. The new offence will extend to
England and Wales and Northern Ireland. It will have a maximum
custodial sentence of 10 years. The new offence closely follows
proposals set out in the 2002 Law Commission report on fraud, which
concluded: “The
existing legislation was deficient in a number of
respects.” The
over-particularisation of the deception offences in the Theft Act means
that it is possible for some behaviour to fall outside the statutory
offences. Therefore, defence lawyers can argue that it may have been
some form of deception but it was not that precise form of deception.
The prosecutors have charged the defendant with the wrong
offence. There is the
risk that the offences are going to result in unjustified acquittals
and costly appeals. The reliance on deception, as an essential
ingredient of the crime, is problematic if it is not always clear that
there is a victim who has been deceived. For example, a shopkeeper may
have accepted a credit card for a payment not knowing, or being
indifferent to, whether the cardholder has the authority to use the
card, provided that the transaction results in the shopkeeper being
paid, which it normally would.
The Law Commission concludes
that the laws of fraud could be improved by the introduction of a
general offence of fraud. A general law would improve the prosecution
process, first by reducing the chances of offences being wrongly
charged. Secondly it would, by virtue of its simplicity, be fairer to
citizens who might face a trial and would better be able to understand
the law. Thirdly, it would provide a greater flexibility to keep pace
with the increasing use of technology in crimes of fraud.
The proposals for this offence
were widely welcomed during the consultations undertaken by the
Government and will improve the law of fraud by moving away from the
existing patchwork of deception offences towards a clearer definition
of fraud. The simplified and rationalised fraud offence will provide
those working on the frontline with the necessary tools to be able to
tackle fraud more
effectively.
Mr.
Grieve: May I first of all apologise for removing my
jacket without permission? I made an assumption of your benevolence
that I should not have made, although I am delighted that having done
so, I was not ticked off. I thank you for that. Broadly speaking, I
welcome the new offence of fraud and have no doubt that the
Solicitor-General is right in what he says about the necessity of
having such an offence. I also welcome the manner in which the Law
Commission put forward the proposals.
The Government have followed
those proposals inclause 1 and I have every reason to welcome
what has been done.
If I was to
flag up a concern, it would be one that will become clearer a little
further on in the Bill, when we come to fraud by abuse of position. But
it is also worth highlighting it as this stage. As the
Solicitor-General rightly says, one of the consequences of what we are
doing is dealing with the problem of the victimless crime.
Although little crime is
victimless, my experience of fraud cases—in particular, one long
fraud trial in which I was involved—was that, as the
Solicitor-General has highlighted, the prosecution case collapsed
precisely because it was unable to show upon whom the false
representations had been operated. As I was appearing for the defence I
suppose I was jolly glad about
this. The case was one
of mortgage fraud. The nature of the crime was that fictitious
applications were being made for mortgages in the names of all sorts of
people who did not exist, or front individuals were being used to apply
for mortgages. But the mortgages all related to real properties. As the
case proceeded, it became quite clear that those operating in the
building societies at a time when the market was entirely buoyant and
was rising spectacularly could not have cared less where the
applications for mortgages were coming from. As far as they were
concerned, they knew that the lending was secure on the property;
therefore, the fact that the circumstances in which this information
was coming to them was totally bogus was of no interest to
them.
A cynic might
have said that they were rather pleased to get the work; as they were
all on bonuses according to the amount of mortgages that they were
handing out and they knew that the lending was secure, they may even
have turned a blind eye to the fact that the person submitting this
large number of mortgages was in fact concocting the names of the
people making the applications.
That illustrates precisely the
sort of point the Solicitor-General and the Law Commission have
highlighted and which clause 1 is designed to deal with. The sort of
activity I have just described would be caught by the clause because,
by its very nature it was a case of false representation and failures
to disclose information about what was taking place.
I make that point to the
Solicitor-General because as we look at the Bill in its entirety, we
will have to be careful to try to ensure that we draw a dividing line
between activity we wish to criminalise and activity that we might
regard as morally reprehensible but which I have some doubts as to
whether we would wish to make criminal. That comes to light
particularly when we consider abuse of position. I highlight that now
because it may be advantageous to look at it in terms of the broadest
framework of the Bill before we move on to the specifics. To summarise,
we are completely satisfied with clause 1 and with the broad thrust of
the Bill, which merits
support.
Mr.
Heath: May I echo the closing words of the hon. Member for
Beaconsfield (Mr. Grieve)? There is common agreement that the Law
Commission has done an extremely good job in issuing its report and
recommendations. Its argument for simplification and rationalisation of
fraud offences is one that is difficult to argue against. As Griew
noted about theft,
“No
one wanting to construct a rational, efficient law of criminal fraud
would choose to start from the present position. The law...is in a
very untidy and unsatisfactory condition.”
That is a
commonly held view. The conclusions are to be applauded not only
because they provide clarity where there was a lack of it and because
they provide offences that are comprehensive where there was a lack of
comprehensiveness in respect of previous offences, but because there is
a higher likelihood of successful prosecution when a simple test can be
applied. At the moment, there is every opportunity for the defence to
produce technical arguments in favour of acquittal that bear no
relationship to the actual acts that took place. They are essentially
legal arguments rather than arguments about fact. I support clause 1.
It is a sensible
measure. I understand
the point made by the hon. Member for Beaconsfield about the danger of
having something so broad and encompassing that it covers behaviour
that we may consider occasionally falls short of criminality, which
nevertheless is not to be encouraged. When framing statute and
offences, there is a difficulty whether we make them so comprehensive
to ensure that criminal acts are without doubt caught within that
compass or make them so particular that they fail to do that. There are
arguments on both sides and we must accept that often we must make a
compromise between those two positions and that a lot depends on the
good sense of the prosecuting authorities in respect of what is put
before a court. When
considering such matters, we must be extremely careful to make sure
that we are not putting in the hands of prosecuting authorities an
overbearing offence that can be applied improperly to those who are, in
the judgment of most people, acting in a way that is worthy of
opprobrium, but not criminal sanction. However, we shall be debating
that matter later in the Bill. I welcome clause 1 and feel no need to
amend it or argue against
it.
The
Solicitor-General: I am grateful to both hon. Gentlemen
for the way in which they set out their views. We can clearly deal with
the abuse of position when we discuss the amendments. The Government
considered some of the points raised, particularly whether there should
be a broader offence in respect of fraud but, although a general
offence should be created, there would be obvious risks in making it so
broad that it would be imprecise and unclear about what would be
covered by
it. The
Government took the view that the Law Commission’s
recommendation that there should be a general offence, with its
specific limits categorised in the subsequent clauses that we shall
come to, was the best way forward, and that we had therefore got the
balance right. I am grateful to both main Opposition parties for saying
that they, too, feel that the Law Commission and the Government have
got that balance
right. Question put
and agreed
to. Clause 1
ordered to stand part of the
Bill. Clause
2Fraud
by false
representation Question
proposed, That the clause stand part ofthe
Bill.
10.45
am
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