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Lord Clinton-Davis: I am not disposed to speak against the idea that has been proposed, but I do not think that, in practice, it should be encouraged. My uncertainty stems from the fact that, while a reduction in the fine as envisaged in the Bill serves as an incentive to prompt payment, the aspect that has been outlined by the noble Lord is rather uncertain. In my view, that uncertainty is inimical to the purposes of the legislation.

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The proposal adumbrated by the noble Lord is not totally foreign to my views, but having regard to what I have said, I think that the element of uncertainty that would be introduced is something that should not be encouraged. However, I shall wait to hear what my noble friend has to say in response.

Baroness Seccombe: My Lords, we on these Benches support the amendment moved by the noble Lord, Lord Goodhart. I shall cite my experience once again. Those who do not pay their fines usually have a string of other debts, and it is for that reason that they do not pay their fines either. However, they avoid paying fines for an added reason: their other debts do increase as a result of interest being added to them. So, naturally, the debt that is pushed to the bottom of the pile is the fine.

We believe that it would be helpful to have such a form of—how can one put it?—incentive so that fine defaulters will know where they stand. Their fines will be put in the same position as any other form of debt.

Baroness Scotland of Asthal: My Lords, I seem to be repeating these words rather often today, but I do understand the concerns that lie behind this issue. Perhaps I may go through how we have sought properly to address it.

Amendments Nos. 66 to 79, 82 and 84 tabled by the noble Lords, Lord Goodhart and Lord Thomas of Gresford, would replace the existing arrangements set out in Schedule 2 to the Bill which allow for an increase in the fine on default, with a regime of charging interest on the fine for every day that any amount of it remains unpaid. It is that point which we believe would be quite difficult, because interest rates may or, indeed, will change. Calculations made on a day-to-day basis may prove to be a challenge. I shall amplify on that later in my remarks.

I am pleased that we now have the opportunity to debate this issue. It was raised both at Second Reading and in my letter of 23rd December, when I touched on it in response to the points then made. The subject was raised again in Committee by the noble Lord, Lord Goodhart, and by the noble Baroness, Lady Seccombe.

The Government understand the concerns which have prompted these amendments. They seek, first, to ensure that the fines officer does not, by activating an increase in the fine upon default, stray into judicial territory and, secondly, to ensure that the defaulter can repay the fine at a more reasonable rate rather than facing a single uplift.

The Government have taken great care to ensure that the fines officer does not have the power to alter the decision of the court. It is for the court to make a collection order under Schedule 2. The fines officer then exercises discretion within the constraints of that order. The fines officer has no power to determine the level of the increase. Thus I can reassure the noble

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Lord, Lord Goodhart, that the amount of the increase will be fixed by regulations and will not be set at the discretion of the fines officer. The increase is an automatic consequence of default under the terms of the collection order, which will be waived on subsequent co-operation.

The noble Lord, Lord Goodhart, mentioned the issue of fixed penalty fines for road traffic offences. He will know that there are provisions that, just as you can get a discount for prompt payment, there can be an increase for delayed payment. So this is not a novel departure.

The level of increase will be set in the regulations made by the Lord Chancellor and expressed as a percentage of the original fine. The proposed pilot schemes will enable the effectiveness of different levels of increase to be assessed, and we shall consult the magistrates' courts community before the level that will apply to the final scheme is set.

Of course, measures already exist allowing for interest to be levied on unpaid confiscation orders under Section 10 of the Drug Trafficking Act 1994—which is due to be replaced by Section 12 of the Proceeds of Crime Act 2002—but applying such a model to fine enforcement would have a number of disadvantages.

First, the procedure would be administratively complex. The fines officer would have to perform a fresh calculation whenever it became necessary to check the amount outstanding, whether for the purpose of reminding the defaulter of the sum now due or for the purpose of ensuring that the amount owed, plus interest, has been accounted for. Both the fines officer and the offender would, in effect, be attempting to hit a moving target.

There would be enormous scope for confusion and for appeals arising from disputed calculations. The likelihood of small over-payments or under-payments could not be ruled out and would give rise to onerous administrative work for court staff, greatly increasing the running cost of the scheme. Calculating the interest daily would be a huge amount of work for even very small sums of money. For example, on a 100 fine, the interest at a rate of 8 per cent per annum is 8 per year, or just over 2p per day.

Of course similar drawbacks may be said to apply to charging interest on confiscation orders. However, the number of cases of confiscation orders in default and where interest is charged is considerably lower than the number of fines in default. In 2000, 836 confiscation orders were made in relation to drug trafficking offences; in the same year, more than 1 million fines were imposed. Furthermore, the sums involved in confiscation orders are often considerably higher than the average fine. In 2000, the average confiscation order was just under 6,000; the average fine was 143.

The administrative burden that the noble Lord's proposals would impose would not be inconsiderable. I agree with my noble friend Lord Clinton-Davis that such uncertainty and variation should not be encouraged.

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The amendments set no ceiling on the amount of interest that could be charged. In extreme cases this could lead to defaulters owing sums that they were simply unable to pay. There is a danger that this could lead to a disinclination to face up to the problem, pushing the defaulter into taking out further credit or causing him to commit further crimes in order to raise the money. There may also be disputes over the period the fine has been outstanding, especially in courts where there are not the facilities to accept immediate cash payments.

I take on board the point made by the noble Baroness, Lady Seccombe, about making sure that there is an incentive for the fines not to be pushed to the bottom of the pile and for other debts to take precedence. We believe that the scheme we propose will achieve this without the undue complexity of the calculations envisaged in the amendment.

As it stands, Schedule 2 allows for a single increase upon default. This will be a percentage of the original fine, restricted to a maximum of 50 per cent. That is a far simpler calculation for the fines officer. It sets a limit on the amount that could fall to be paid by the defaulter, and the defaulter will know immediately how much extra he will have to pay in consequence of default or could avoid paying by compliance.

Finally, the 50 per cent set in the legislation for increase and discount are maximums designed to limit the Lord Chancellor's power. There is no presumption that the actual figures used will be 50 per cent or that the percentage discount will necessarily be the same as the percentage increase. We hope that the pilots will enable us to determine the optimum percentage.

We understand the concerns expressed but we believe that the noble Lord's proposals are far more complex than the measures we propose. The pilots will assist us to see whether we have got it right and, in accordance with the other issues, we shall be able to assess and make further comment through the procedures I have outlined. With those assurances, I invite the noble Lord to withdraw the amendment.

Lord Goodhart: My Lords, the noble Baroness's arguments against our proposals do not really bear close examination. In particular, that applies to the argument that it will be very difficult to calculate such interest. My view is that any competent fines officer should be able to do the calculation in about 30 seconds on a pocket calculator. It would certainly be perfectly simple to set up a program on the office computer. It would simply be a matter of entering the amount of the fine, the date of the default and the date of payment. The program would then calculate the amount due within a few seconds. I cannot see that that would cause any problems.

The suggestion has also been made that the interest might eventually lead to the accumulation of sums that defaulters would be unable to pay. At present, it is proposed that an increase could be made of up to 50 per cent in one go, which would take effect immediately. However, if interest is charged at the rate

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applicable to judgment debts, which I believe currently ranges between 5 per cent and 6 per cent, it would take eight years to build up to the level of a 50 per cent—

Baroness Scotland of Asthal: My Lords, I tried to make it clear that the 50 per cent would not automatically apply; it is a maximum that would set a limit against which the Lord Chancellor could not fix it. It is by no means sure that 50 per cent will be the appropriate figure adopted.

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