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Session 2006 - 07
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General Committee Debates
Serious Crime

Serious Crime Bill

The Committee consisted of the following Members:

Chairmen: Mr. Joe Benton, John Bercow
Blunt, Mr. Crispin (Reigate) (Con)
Brokenshire, James (Hornchurch) (Con)
Browne, Mr. Jeremy (Taunton) (LD)
Campbell, Mr. Alan (Lord Commissioner of Her Majesty's Treasury)
Coaker, Mr. Vernon (Parliamentary Under-Secretary of State for the Home Department)
Cox, Mr. Geoffrey (Torridge and West Devon) (Con)
Eagle, Maria (Parliamentary Under-Secretary of State for Justice)
Gwynne, Andrew (Denton and Reddish) (Lab)
Hogg, Mr. Douglas (Sleaford and North Hykeham) (Con)
Lucas, Ian (Wrexham) (Lab)
Moran, Margaret (Luton, South) (Lab)
Mountford, Kali (Colne Valley) (Lab)
Reed, Mr. Jamie (Copeland) (Lab)
Rogerson, Dan (North Cornwall) (LD)
Ruane, Chris (Vale of Clwyd) (Lab)
Waltho, Lynda (Stourbridge) (Lab)
Wright, Jeremy (Rugby and Kenilworth) (Con)
Emily Commander, Committee Clerk
† attended the Committee

Public Bill Committee

Tuesday 10 July 2007


[Mr. Joe Benton in the Chair]

Serious Crime Bill

10.30 am
Schedule 9 agreed to.
Clauses 69 to 71 ordered to stand part of the Bill.
Schedule 10 agreed to.

Clause 72

Powers to seize property to which restraint orders apply
Question proposed, That the clause stand part of the Bill.
Mr. Douglas Hogg (Sleaford and North Hykeham) (Con): We are extending various powers to accredited financial investigators that are currently enjoyed by police officers under the Proceeds of Crime Act 2002, and I am cautious whenever I see a proposal that powers of seizure should be entrusted to somebody other than a police officer. We need some clarification on why that is happening in this case and what safeguards exist.
The Parliamentary Under-Secretary of State for the Home Department (Mr. Vernon Coaker): I will speak to clause 72 and add points that are relevant to one or two of the following clauses. I am aware that the right hon. and learned Member for Sleaford and North Hykeham tabled amendments to leave out this and the subsequent three clauses. As he said, those clauses provide for accredited financial investigators to act under the powers of the 2002 Act. Such investigators already have access to an array of powers: investigating money laundering; investigating the extent and the whereabouts of a suspect’s benefits of crime; and, applying for an order to restrain a person’s assets. Those powers have proved a great success.
The Government recognise the important contribution of the agencies for which such investigators work to the rise in the value of money recovered from criminals. An extension of those powers beyond the police and Her Majesty’s Revenue and Customs to others, such as the Serious Fraud Office, fraud investigators in the Department for Work and Pensions and the immigration service, has strengthened our overall capacity in the recovery of the proceeds of crime. The important point is that we are trying to improve our capacity to recover the proceeds of crime from people who are seeking to gain from criminal activity.
Currently, appropriately accredited financial investigators can apply for restraint orders. Those are interim orders to freeze property and are made in anticipation of a confiscation order following conviction. Police and customs officers have separate powers to seize property, subject to a restraint order, to prevent its removal from their jurisdiction. The clause will extend the powers of accredited financial investigators, giving them the ability to seize such property.
Mr. Hogg: I intervene at this point only because the Minister is nearing the end of his notes. What troubles me is the identity of the accredited financial investigator. We are referred to section 435 of the 2002 Act, which I have here. However, when I go to that section, I find no definition of who the accredited financial investigator is. I tell the Minister that the Committee would be much happier if it knew something about the identity of those individuals who are so undesignated.
Mr. Coaker: The right hon. and learned Gentleman anticipates my remarks. The accredited financial investigators will first undergo training by the National Policing Improvement Agency, which will then accredit them and monitor their performance. Hon. Members will be aware that other clauses move the responsibility for training financial investigators from the Assets Recovery Agency to the National Policing Improvement Agency. Therefore, they will be trained and accredited by the NPIA, will be expected to conform to a code of practice and will be monitored in carrying out their duties. Of course, as well as accrediting them, it will be perfectly possible for the NPIA to take away that accreditation. Its responsibility, therefore, is to accredit people; and, if they go through the appropriate training and are accredited, they will be able to exercise those powers. I am coming to a point that may answer the right hon. and learned Gentleman’s next question.
Mr. Hogg: It may be that I anticipate the next answer. The Minister has told us who will train the financial investigators, and I am jolly glad to know that. But where are they seated; are they private sector characters or are they seated in public organisations? At the moment I do not have a sense of who will employ, instruct and pay them, on whose behalf they will act, and where they are to be found.
Mr. Coaker: As I have said, the right hon. and learned Gentleman’s incisive mind, which we have all come to respect, absolutely anticipates my next remarks. An accredited financial investigator will need to be a member of the staff of a body listed by order by the Secretary of State. Those are public bodies that have a criminal investigation role. They include the Financial Services Authority, the Environment Agency and fraud investigators from the Department for Environment, Food and Rural Affairs. In answer to his point, the accredited financial investigator will need to be a member of such a body, as designated by order by the Secretary of State.
Mr. Hogg: May I sound a word of caution? I listened to the organisations listed by the Minister and I think that we are moving quite a long way from law enforcement agencies. For example, he mentioned some of the DEFRA organisations and the Environment Agency. While they may have some enforcement role to perform, we are moving quite a long way from organisations whose primary responsibility is the enforcement of criminal law. I am not going to oppose the measure, but I do think that there is a problem, and we need to watch carefully those whom he has designated.
Mr. Coaker: I think that the right hon. and learned Gentleman is absolutely right. We all want to recover the proceeds of crime from individuals, and he is quite right to alert the Committee to the extension of powers and sound a note of caution. I give the reassurance that we will, of course, monitor how those powers are used. We expect the NPIA to take its responsibilities very seriously, as it will be the regulatory body for the training of those accredited financial investigators.
Question put and agreed to.
Clause 72 ordered to stand part of the Bill.
Clause 73 ordered to stand part of the Bill.

Schedule 11

Powers to recover cash: financial investigators
Mr. Coaker: I beg to move amendment No. 239, in schedule 11, page 115, line 27, at end insert—
‘ (1) Section 302A (powers for prosecutors to appear in proceedings) (as inserted by section (Powers for prosecutors to appear in cash recovery proceedings)(1) above) is amended as follows.
(2) In subsection (1)—
(a) after “constable”, in the first place where it appears, insert “or an accredited financial investigator”; and
(b) after “constable”, in the second place where it appears, insert “or (as the case may be) an accredited financial investigator”.
(3) After subsection (3) insert—
“(4) The references in subsection (1) to an accredited financial investigator do not include an accredited financial investigator who is an officer of Revenue and Customs but the references in subsection (2) to an officer of Revenue and Customs do include an accredited financial investigator who is an officer of Revenue and Customs.”’.
The Chairman: With this it will be convenient to discuss the following: Government new clause 17—Powers for prosecutors to appear in cash recovery proceedings.
Government amendment No. 240.
Mr. Coaker: These are relatively minor and technical amendments.
Amendment agreed to.
Schedule 11, as amended, agreed to.
Clause 74 to 76 ordered to stand part of the Bill.

Clause 77

Extension of powers of Revenue and Customs
Question proposed, That the clause stand part of the Bill.
James Brokenshire (Hornchurch) (Con): The clause will give effect to schedule 12, which will extend the powers in the Regulation of Investigatory Powers Act 2000 to all criminal investigations undertaken by Her Majesty’s Revenue and Customs. The clause has been raised in the context of the ongoing review of HMRC’s powers. The Law Society has raised a number of concerns in relation to the provisions, stating:
“In our responses to the ongoing consultation we have made clear our view that HMRC should not have wider powers than those available to the police.
It is equally vital to ensure that the use of any new powers is authorised at an appropriately senior level within HMRC. At present, the senior authorising officers for the police are Chief Constables (Commissioners for the Metropolitan and City police forces), whereas for HMRC those authorised will be officers of HMRC. We believe the act must make clear the level of seniority required to authorise such intrusive powers and should identify an equivalent level of seniority to that of Chief Constable. In addition, the officers in question should be limited to those in HMRC’s new Criminal Investigations Directorate—as is the case with the proposed powers of arrest—who have received thorough training in the exercise of these powers.”
Those seem sensible and reasonable points. What assurance can the Minister give that they have been or will be addressed?
Mr. Coaker: It may help the Committee if I say a few words about the clause. In answer to the hon. Gentleman, my understanding is that those authorised will be senior officers. At present, only five officers within HMRC are authorised to act in that sphere of work, so it is not a widespread responsibility—only a small number of specially trained officers have it.
Another point worth making to the hon. Gentleman is that work in that area is divided into criminal and civil cases. One aspect of the arrangements that concerned people was that the two parts of HMRC’s operations should not be merged, as they are very distinctive and it is a small, specialised body.
Clause 77 and schedule 12 extend the surveillance powers available to HMRC to tackle serious crime. At the moment, they are available only when the crime relates to an ex-Customs and Excise matter. The clause would make them available also for serious crimes that relate to ex-Inland Revenue matters. The change is necessary to address the emerging patterns of criminality targeting ex-Inland Revenue tax systems, such as self-assessment, tax credits and gift aid. That criminality involves not only the evasion of tax on income or commercial profits, but organised attempts fraudulently to extract money from the Exchequer. For example, in June four people were jailed for a total of 19 years for committing a £1 million fraud involving the gift aid scheme. The extension of the powers would allow HMRC more effectively to investigate and bring to justice criminals engaged in serious attacks on ex-Inland Revenue systems. The powers would help to establish the links between those involved in the criminal activity, the financial structure of the activity, and where the proceeds of the crime are located. For example, the serious criminals behind organised tax credit fraud involving identity theft may engage foot soldiers to operate bank accounts for them. The extended powers would make it easier to establish the links between the foot soldiers and the major players, allowing the full extent of the crime to be uncovered.
10.45 am
The interception of communication requires a warrant from the Secretary of State. Intrusive surveillance must be approved by a surveillance commissioner, and the most intrusive property interference also requires the approval of a commissioner. All property interference must be reported to the commissioners, who can quash any authorisation. As the hon. Gentleman will know, use of the powers will be overseen by the independent Interception of Communications Commissioner and the Office of Surveillance Commissioners. Complaints can be made to the investigatory powers tribunal, and HMRC is subject to inspection by HM inspectorate of constabulary. None of that will change.
I assure the hon. Gentleman that only senior officers will be able to apply for warrants, and there will be rigorous internal controls on applications. I think that that is the reassurance that the hon. Gentleman sought. It will involve only a small number of people in HMRC, and only senior directors will be able to apply for warrants.
James Brokenshire: I am grateful to the Minister for his assurance that only a small number of people will be involved. I ask him to reflect on the provisions of schedule 12, particularly whether it could make it clearer precisely who is mandated by the provisions. Will he give an assurance in response to the points raised by the Law Society? If he is able to identify and deal with those points, will he bring forward appropriate amendments on Report?
Mr. Coaker: I think that there are appropriate safeguards, but given the spirit in which the Committee has conducted its business, and without saying that I will bring forward an amendment—I am not making that commitment—I will consider the matter and point out the specific safeguards that we believe are already in place. That, I hope, will answer the points made by the hon. Gentleman and the Law Society. I will consider the matter, but I will not give a commitment to bring forward amendments on Report. Rather, I shall simply consider whether the schedule gives us all the safeguards that we want.
Question put and agreed to.
Clause 77 ordered to stand part of the Bill.
Schedule 12 agreed to.
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Prepared 11 July 2007