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As well as such terms of an order being used rarely, as I have said, the costs to the organisation will be reasonable and proportionate. We have also included certain safeguards, to ensure that the costs are proportionate to any organisations that might be made subject to a serious crime prevention order. Such a term of an order will require only those organisations that have been proved to be involved in serious crime to pay an additional reasonable and proportionate cost, in order that we can ensure that they are not engaged in serious crime. That is surely preferable and more proportionate in achieving the desired end, in that it steers a course between letting the criminal behaviour continue and seeking to end the activities of that organisation altogether. As a result, I am confident that the imposition of costs is appropriate.
James Brokenshire (Hornchurch) (Con): This proposal, relating to the establishment of new monitors under serious crime prevention orders contemplated in the Bill, is a late addition. I note what the Minister has said about the necessity for the monitors, but that is a matter for our debate on the substantive elements of the Bill and on the way in which the Government have tabled the amendments to it. It is surprising that the Government are tabling such amendments at this late stage, especially as the Bill has already been scrutinised in the other place. It raises concerns about the extent to which the provisions have been examined, but we will debate that in greater detail outside the Ways and Means resolution. We shall not oppose the resolution, but that should not be taken as our acceptance of, or acquiescence in, the general arguments on the creation of monitors arising from serious crime prevention orders.
Orders of the Day
Serious Crime Bill [Lords]
As amended in the Committee, considered.
[Relevant documents: Twelfth Report from the Joint Committee on Human Rights of Session 2006-07, Legislative Scrutiny: Fifth Progress Report, HC 490.]
‘(1) A serious crime prevention order against a body corporate, partnership or unincorporated association may authorise a law enforcement agency to enter into arrangements with—
(b) any person who falls within a specified description of persons;
to perform specified monitoring services or monitoring services of a specified description.
(2) A person with whom the agency has entered into arrangements in accordance with such an authorisation is known for the purposes of this section as an authorised monitor.
(3) A serious crime prevention order which provides for an authorised monitor may, for the purpose of enabling the performance of monitoring services, impose requirements of the type mentioned in section 5(5) as if the references in paragraph (a)(iv) and (b)(iv) of that provision to a law enforcement officer included references to an authorised monitor.
(4) A serious crime prevention order which provides for an authorised monitor may require any body corporate, partnership or unincorporated association which is the subject of the order to pay to the law enforcement agency concerned some or all of the costs incurred by the agency under the arrangements with the authorised monitor.
(a) must specify the period, or periods, within which payments are to be made;
(b) may require the making of payments on account;
(c) may include other terms about the calculation or payment of costs.
(6) The tests for making or varying a serious crime prevention order in sections 1(1)(b), (2)(b) and (3), 17(1) and (2), 19(2), (4) and (5), 20(2) and (4) and 21(2) and (4) do not operate in relation to an order so far as the order contains terms of the kind envisaged by subsections (4) and (5) above (or by subsection (1) above for the purposes of those subsections).
(7) But a court must not include in a serious crime prevention order (whether initially or on a variation) terms of the kind envisaged by subsection (4) or (5) unless it considers that it is appropriate to do so having regard to all the circumstances including, in particular—
(a) the means of the body corporate, partnership or unincorporated association concerned;
(b) the expected size of the costs; and
(c) the effect of the terms on the ability of any body corporate, partnership or unincorporated association which is carrying on business to continue to do so.
(8) A law enforcement agency must inform the subject of a serious crime prevention order which provides for an authorised monitor of the name of, and an address for, any person with whom the agency has entered into arrangements in accordance with the authorisation in the order.
(9) Nothing in this section affects the ability of law enforcement agencies to enter into arrangements otherwise than in accordance with an authorisation under this section.
“law enforcement agency” means—
(a) a police authority or the Northern Ireland Policing Board;(b) the Serious Organised Crime Agency;(c) the Commissioners for Her Majesty’s Revenue and Customs; or(d) the Director of the Serious Fraud Office; (a) analysing some or all information received in accordance with a serious crime prevention order;(b) reporting to a law enforcement officer as to whether, on the basis of the information and any other information analysed for this purpose, the subject of the order appears to be complying with the order or any part of it; and(c) any related services; and“specified”, in relation to a serious crime prevention order, means specified in the order.’.— [Mr. Coaker.]
Brought up, and read the First time.
The Parliamentary Under-Secretary of State for the Home Department (Mr. Vernon Coaker): I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker (Sir Michael Lord): With this it will be convenient to discuss the following:
Government new clause 2— Costs in relation to authorised monitors.
Mr. Coaker: In his report, “Regulatory Justice: Making Sanctions Effective”, Professor McCrory advocated that
“regulatory sanctions were consistent with, and appropriate for, a risk based approach to regulation, as set out in recommendation eight of the Hampton Review. The Hampton Review recommended that the penalty regime should be based on the risk of re-offending and the impact of the offence...with tougher penalties for rogue businesses that persistently break the rules.”
There is a significant read-across between the approach that he advocates and the innovative and targeted approach to involvement in serious crime that we are proposing in the amendments. We have already discussed the fact that businesses are increasingly used by serious criminals as the means by which they, for example, launder money or attempt to disguise activities such as people-trafficking or drug-trafficking. Businesses can be in more than one place at a time, they can have complicated legal structures and they can carry out exceedingly complex business and large amounts of transactions on a daily basis. All those things make them very difficult to interdict for their involvement or use in serious criminal enterprises.
The Serious Organised Crime Agency, the Serious Fraud Office, Her Majesty’s Revenue and Customs and the rest of the law enforcement community are constantly developing and using innovative approaches to dealing with this problem. They are having significant successes and should be commended. However, the inexhaustible potential for using businesses in different ways to further serious criminal ends means that that work is not always enough.
The amendments will mean that, for example, where a business has been proved to be involved in serious crime, an order can require it to provide its accounts or other information to an authorised monitor, to ensure that it complies with a requirement not to conduct its business in a particular way. That will be effective where the information is particularly complex and where someone such as a forensic accountant will be able to make a far better assessment than a law enforcement agency of the way in which the business is conducting itself. If the court authorises a law enforcement agency to employ a monitor, it can go on to provide, as a term of the order, that the organisation that is the subject of the order must pay the costs that the law enforcement agency incurs in employing the authorised monitor. That effectively increases the regulatory burden on a business because it has been proved to be involved in serious crime. The provisions target regulation in a risk-based manner, and mean that burdensome regulatory approaches do not have to be taken to deal with the few bad apples in any business area. Regulation does impose a cost on business, but we can all agree that this is better than the results of no regulation at all.
James Brokenshire (Hornchurch) (Con): The Minister has talked about the application of the orders and the way in which they would need to be monitored, and I understand his point about the complexity of corporate structures and how businesses might be used. Will he explain, however, whether the orders will require the recipient to have knowledge that they have committed or been involved in a serious crime? There could be a risk that someone unknowingly involved in such a crime could be the subject of an order and have to pay the cost of the monitoring.
Mr. Coaker: We went through that debate at great length in Committee. The applicant authority would have had to go to court over any organisation that was the subject of a serious crime prevention order. Only in circumstances where someone had either encouraged or facilitated a crime would they be made the subject of a serious crime prevention order. The hon. Gentleman’s point would have been considered by the court before deciding whether to apply the order. There is the potential, in appropriate circumstances, for there to be a burden on the business concerned, but that is to be preferred to the potential cost of having to regulate an entire sector.
4.45 pm
The provisions include a safeguard whereby the courts will impose a requirement to pay costs only where it considers it appropriate to do so. In reaching that decision, it will have regard to the means of the body corporate, partnership or unincorporated association concerned; to the expected size of the costs; and to the effect of the terms on the ability of any body corporate, partnership or unincorporated association that is carrying on business to continue to do so. That provides a strong steer to the courts to ensure that the orders are used only where the overall effect on the business is not such as to cause damage to it as an ongoing concern.
James Brokenshire: The Minister talks about the assessment of the costs of the order and of the monitoring. How is it likely to be presented to the court and what scope would there be for any re-assessment of such costs, which, at the outset, may not be readily calculable when the court is considering the matter?
Mr. Coaker: As the hon. Gentleman will know, the practical arrangements for deciding how costs are to be arrived at will be done through order. It is one important aspect of the order making power, so as it goes through, we need to consider the practical consequences, how costs will be apportioned and what amounts are appropriate. The important point in respect of the primary legislation, however, is the existence of safeguards for any business, organisation or partnership—and they are set out in the provisions. As I have explained, we want to ensure that businesses made subject to a serious crime prevention order by the courts abide by the terms of that order. By the use of a forensic accountant or other suitable professional, we want to ensure that businesses comply, but we do not want to do so in a disproportionate way—hence the safeguards that I have outlined. I rather think that the hon. Gentleman knew the answer to his question before he asked it: costs will be subject to the order making process.
The new clause strikes an appropriate balance between the need to ensure that businesses are not used by serious criminals and the need to ensure that the business sector as a whole is not damaged by measures designed to combat the few. I thus commend the new clause to the House.
James Brokenshire: The first thing to note about new clause 1 and the accompanying new clause 2 is that they are obviously very late in consideration. Given what the Minister has said about their importance and necessity, it is surprising that we are considering these proposals on Report—after the entirety of the Bill has already been examined.
I acknowledge what the Minister has said about the complexity of what is involved. I accept that in serious and organised crime, criminals will go to great lengths to ensure that their true purpose is disguised and that different corporate structures may be used to try to hide criminal activity. On the face of it, whatever the merits of serious crime prevention orders—we will come on to debate them later—if they are to apply and be effective, there is clearly a need for monitoring to ensure that their terms are adhered to. Without proper monitoring the orders will be ineffective, because it will not be known whether they have been breached and whether the appropriate sanctions should apply. I realise that the position is complex and that on the face of it there is a need for experts to be involved, but the new clause leaves a good deal of room for improvement.
I want to raise a few points on which I have sought elucidation from the Minister. The key point is that, while a person or corporate body subject to a serious crime prevention order would need to appear before a court, that person or body would not necessarily have committed a serious offence, but would only have had to be involved in a serious crime. We shall discuss that more fully during our wider debate on the orders themselves.
It might be said that involvement in a serious crime indicated a direct link and was therefore extremely important, but the wording of the Bill suggests that the link may be somewhat more indirect. Clause 2(1)(b) and (c) make it clear that such involvement could include a person’s facilitating the commission of a serious offence, or conducting himself
“in a way that was likely to facilitate the commission”
of a serious offence. There is no requirement for intention in those circumstances. Indeed, clause 4(2) imposes what is almost a reverse burden of proof on the person who is potentially subject to an order, who must show that his actions were “reasonable in the circumstances”.
The Minister said that only about 30 orders a year would be issued, and that has been stated consistently and clearly throughout the review of the draft legislation. What is not clear is whether this measure is really about the Mr. Bigs or whether it is likely to be used far more widely than the Minister intends, purely because of the way in which it is drafted. That is worrying in this context and a number of others. Notwithstanding possible assurances that the measure is supposed to be limited and to attack only the very central figures, it could be interpreted as allowing peripheral figures who, despite having no direct intention and no direct knowledge that they have facilitated or been engaged in facilitating serious crime, may find themselves subject to a serious crime prevention order—and, subsequently, to another order requiring them to pay for the monitoring of their compliance with it.
That potential injustice leaves me extremely uncomfortable with the ambit of the new clause, despite the Minister’s statement that it is intended to focus only on a very small group of corporates, and to ensure that forensic accountants and experts are brought in to aid the monitoring, enforcement and interpretation of the orders. That second aspect—cost—strikes me as extremely important. I have already described the legislation as wide ranging and potentially draconian. New clause 1(4) states
“A serious crime prevention order which provides for an authorised monitor may require any body corporate, partnership or unincorporated association which is the subject of the order to pay to the law enforcement agency concerned some or all of the costs incurred by the agency under the arrangements with the authorised monitor.”
It goes on to state that payments on account may also be required, which effectively means that payment must be made in advance of the monitoring.
As we have heard from the Minister, it is unclear how those costs will be assessed; in essence, they will be drawn in through secondary legislation. It is also unclear how the court will determine those costs and, therefore, the impact on the business concerned. He has tried to point out the protections in new clause 1(7), which is intended to give the courts a particular role in assessing the relevant circumstances, examining
“(a) the means of the body corporate...
(b) the expected size of the costs”.
The provision also deals with the effect that the order and the monitoring would have on that body corporate.
We do not know what those costs will be, how they will be assessed and how they will be measured. The court will be put in a difficult position in assessing the impact of the order on the body—the company or business—because it will have to undertake a detailed examination and review of the finances, the business and the way in which the company operates to assess whether the order would have a particular effect and whether it would risk the bankruptcy, liquidation or winding up of the company. That will be a hard decision for the court to make, particularly given that it will have to make an assessment of costs that may subsequently change.
I am sure that the Minister will say that the Government will set out in the order what the compliance should be, what the terms of the order are and therefore why there is a need for monitoring, but difficulties are involved. Given my professional background, I know that sometimes the costs that one is given in advance may not end up being the costs that arise. The monitor—this expert—will have to make a judgment about what is involved and what its own professional costs are likely to be in seeking the order in the first place.
The court will be in a difficult position. How will it go about assessing the costs and the impact when it may have limited information on that body corporate? It will clearly not have a full understanding of how that company conducts its business, the pressures on it and the market conditions. This provision could have a significant adverse impact on businesses if a wrong judgment is made, with the best of intentions, based on information that is not complete at the time that a monitoring condition is applied. We could risk creating injustice, particularly if an order was granted against a company whose involvement was peripheral, not intended, not direct and almost without knowledge, even though the court may have been able to show that it should have taken some other action and that is why it is brought within the scope of the serious crime prevention order in the first place.
New clause 1(6) deals with the tests for making serious crime prevention orders. The Minister will be familiar with our debates on Second Reading and in Committee about harm reduction versus punishment. He has said on many occasions, as I am sure he will say this afternoon and this evening, that the Bill is only about harm reduction—it is about preventing serious crime—and that it is not about punishment. One can form one’s own judgment about whether that is the reality in the Bill, but subsection (6) raises interesting questions that deserve greater scrutiny.
Mr. Jeremy Browne (Taunton) (LD): Does the hon. Gentleman see a distinction, as I do, between using these powers to restrict the freedoms of people whose prison sentence has been spent but who have been convicted of an offence, and using them in a preventive capacity in respect of people who may never have been convicted of any offence?
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