HC Deb 14 January 1986 vol 89 cc925-34 3.38 pm
The Secretary of State for the Home Department (Mr. Douglas Hurd)

With permission, Mr. Speaker, I would like to make a statement about the report of the Fraud Trials Committee under the chairmanship of Lord Roskill which was published on 10 January. The House will recall that the committee was set up in 1983, well in advance of recent events, to consider ways of improving the conduct of criminal proceedings arising from fraud.

The Government are most grateful to Lord Roskill and his colleagues for producing with such speed a readable, thorough and radical report. It deals with a serious and urgent problem. We fully share the committee's concern that the perpetrators of serious fraud should be brought effectively to book. The report shows that the legal and administrative machinery for this purpose has been creaking badly. We are determined to bring about the changes in law, practice and attitudes which are necessary.

There are two reasons for this. First, the reputation of our financial institutions, and of the City of London in particular, needs the support of effective action against fraud. Secondly, there must be no escape for offenders simply because their offences are highly complicated or because they can employ large resources to cover them up—the enforcement of the law must be even-handed. Accordingly, the Government welcome the report as providing a basis for early legislation to achieve substantial reforms of the law in this field, and also for new administrative measures in areas where legislation is not required.

Responsibility for the investigation and prosecution of fraud is now shared by the police, the Director of Public Prosecutions, the Department of Trade and Industry and other agencies. Co-operation has been greatly improved in recent years, and permanent fraud investigation group arrangements have been in place since last January. The Roskill committee recommended an urgent examination of the need for a new, unified organisation. We accept the recommendation for such an examination, and it will be immediately put in hand by my right hon. Friend the Chief Secretary.

The committee has called for resources devoted to the pursuit of fraud to be expanded as a matter of priority. The Government are already taking steps to that end through the strengthening of the Department of Trade and Industry by nearly 200 new staff over the next few years, and the addition to the Director of Public Prosecution's Department of nine extra lawyers with support staff. We shall seek to draw in more people with the necessary skill and experience from the private sector on short-service appointments. In addition, the agency and the self-regulatory organisations to be set up under the Financial Services Bill will have their own resources for the investigation of fraud.

As regards the substantive law, my noble Friend the Lord Chancellor and I will be in touch with the Law Commission about its work on conspiracy to defraud. I shall seek the advice of the Criminal Law Revision Committee on early legislation to deal with the urgent problem of the limitations on the use of a charge of conspiracy to defraud to which the Roskill committee drew attention.

The committee made a number of recommendations on juries, including provision for certain complex fraud cases to be tried by a tribunal comprising a judge and two lay members, and for the abolition of peremptory challenges. We shall be consulting urgently about these important matters, and we shall listen with interest to the views which will be expressed in the House and the other place and in general public comment.

The committee's general approach on preparations for trial, the law of evidence and other matters would lead to significant improvements in the trial of fraud cases. The feasibility of certain aspects of these proposals will require further study and we shall need to give more thought to the details. Some of the recommendations may well be applicable in other sectors of the criminal law besides fraud.

To sum up, we have in this report an excellent basis for substantial and worthwhile legislation and administrative action. The report will be immensely helpful in shaping the Government's continuing fight against the insidious menace of fraud. For this, we are most grateful to Lord Roskill and his colleagues. It is now for us and for Parliament as a whole to do our part in carrying forward the work they have begun. I hope that my right hon. Friend the Leader of the House will be able to arrange for an early debate on the report.

Mr. Gerald Kaufman (Manchester, Gorton)

The Home Secretary does not take this matter very far, but no doubt there will be a clearer sign of the Government's views in the forthcoming debate. He mentioned the proposed increase in staff at the Department of Trade and Industry and it is important to strengthen the defences of that Department against fraud.

We should like to hear more about increasing manpower in police fraud squads, about whose adequacy or otherwise there is great concern. Roskill's recommendations for a unified investigating force must be seriously considered. Investigation spread among 47 different organisations is a disorganised shambles. Similarly, court procedures are far too cumbersome and inadequate to deal with modern technology.

Whatever is wrong, I cannot agree with one proposed change. On behalf of the Labour party, I make it clear that we reject outright the Roskill recommendation that in complex cases the right to a jury trial could be removed. It is impossible to define complexity. Juries have been found adequate to deal with profoundly important and detailed espionage cases involving the nation's security and they are a valuable safeguard against the possibility of a prejudiced judge. The right to a jury trial has existed for many centuries and should not lightly be cast aside now.

Fraudsters are getting away with more than £3 billion a year. Much of that is from small savers who face the devastating loss of their life savings. Until now, the Government have shown a lack of determination in pursuing those fraudsters. Under this Government 20 times more people have been sent to gaol for social security benefit fraud than for Inland Revenue fraud. It is no wonder that on Saturday The Times said that there is a suspicion that the rich and well-connected can get away with it.

In his report Lord Roskill declares: In the United Kingdom fraud is a growth industry. He also says: Fraud is posing a threat to London as a financial centre. In the past, the City of London has been admired as the financial capital of the world, but unless the Government show more determination and less complacency there is a danger that it will acquire the deadly reputation of being the fraud capital of the world.

Mr. Hurd

I must say that I am a little disappointed at the grudging way in which the right hon. Gentleman has received the remarkable report and my commendation of it. Bearing in mind what he said towards the end of his statement I would have thought that he would have wholeheartedly welcomed the report and joined us in saying that it is right that it should give impetus to further action in tightening the net against fraud. We intend to put legislation into a Criminal Justice Bill that we are planning for the next session. I look to the right hon. Gentleman for more wholehearted support when we come to that than we have seen today.

The right hon. Gentleman asked about the police joint fraud squad. The Metropolitan and City company fraud department is the largest fraud squad in the United Kingdom with 190 officers engaged in company fraud work. As the right hon. Gentleman knows, I am now carrying out an urgent review to assess specific needs for further increases in the establishment of the Metropolitan police, and the size of the joint fraud squad will come into that.

I note the right hon. Gentleman's comments about juries in cases of complex fraud. In his report, Lord Roskill made a powerful case for a change but, as I said, I think that it is sensible for the Government to wait for the views of the House and opinion outside on that important change. The views of the right hon. Gentleman will not stand alone.

Sir Edward Gardner (Fylde)

Whatever may be the strength of the case for the abolition of trial by jury in complex fraud cases, will my right hon. Friend bear in mind the fact that any attempt to extend that radical principle to other crimes which can at present be tried by jury would be intolerable and unacceptable?

Mr. Hurd

I note what my hon. and learned Friend has said. The Roskill report made a powerful case for ring fencing that area. I do not believe that any action that follows from that aspect of the report should be regarded as capable of further extension.

Mr. Alex Carlile (Montgomery)

I welcome many parts of the Roskill report, but does the Home Secretary not agree that juries have shown themselves peculiarly effective in trying cases of fraud? They have shown themselves willing to convict in 86.8 per cent. of the fraud cases brought before a Crown court. That is a higher percentage than convictions in other classes of case brought before the Crown courts.

Mr. Hurd

I note the hon. and learned Gentleman's views.

Before we concentrate on that recommendation, however, it is important to understand that it is flanked by a series of radical suggestions. For example, the report recommends changes in the law of evidence, which I know that Lord Roskill considers to be of prime importance. It also recommends changes in the disclosure of the case by both prosecution and defence and the institution of preparatory hearings on a more systematic basis. In the committee's view, those are all crucial changes that need to be considered alongside the matter of the fraud trial tribunal.

Sir Peter Hordern (Horsham)

Has Roskill any recommendations to make about the position of accountants to a firm, when they think that fraud might have been committed? In future, should they owe their primary loyalty to their clients, as they have always done in the past, or should a duty be imposed upon them to reveal to the authorities where they suspect fraud is being committed?

Mr. Hurd

My recollection is that the answer to my hon. Friend's question is no, because that point did not lie within the committee's terms of reference.

Mr. Nicholas Brown (Newcastle upon Tyne, East)

The Home Secretary glossed over the resources issue and said nothing about expertise, which was touched on in the Roskill report. What is the Government's attitude towards training in accountancy and new technology for judges and barristers and in particular for those whose job it is to investigate major frauds?

Mr. Hurd

The report has about 112 recommendations: there are many that I did not touch on, but they were summarised in part of my statement. I entirely agree about the importance of that part of the report. It applies to the police, who are my particular concern, as well as to the professions that the hon. Gentleman mentioned.

Sir Peter Tapsell (East Lindsey)

As the answers given yesterday by the Attorney-General about specific cases raised with him seemed to show, is there not a danger that, however much we may tighten legislation on fraud domestically, within the United Kingdom, some of the worst offenders will continue to escape because of the great inadequacy and slowness of the extradition procedures? In that context, will the Home Secretary ask our right hon. and learned Friend the Foreign Secretary whether an international initiative could be taken to improve the extradition procedures not only for fraud, but for terrorism and other crimes which are on the increase, which are facilitated by modern transportation?

Mr. Hurd

My hon. Friend is exactly right. I have already discussed the matter with my right hon. and learned Friend the Foreign Secretary. Fraud offences are extraditable, but, like my hon. Friend, I am concerned at the obstacles placed in the way of extradition of offenders from the United Kingdom. He will have noticed what Lord Roskill and his committee said about evidence being taken abroad. That is a very important point. In addition, in the Criminal Justice Bill next Session, I hope to put before the House important proposals for the reform of our extradition law because I am convinced from everything I have learnt in my present job that, until we are prepared to change the basis of our extradition law, it will be difficult to improve our treaty arrangements with other states. It will be difficult to get back into our own jurisdiction the fraudsters with whom we are concerned unless we have made changes at home.

Mr. Dennis Skinner (Bolsover)

Is the Home Secretary aware that the difficulty is not so much convicting people who have committed fraud, as the hon. and learned Member for Montgomery (Mr. Carlile) said, as making sure that there are enough people around to look for them, similar to those who have been employed to look for people who have been fraudulently active on the Department of Health and Social Security front? There should be as many officers in the fraud squad as there are investigating people who are supposed to be claiming too much supplementary benefit. If we had that many people, we might be able to get hold of some of the fraudsters who are difficult to get hold of. Is it not ironic, at a time when the Government are talking about considering the possibility of getting rid of trial by jury because of the complexity of fraud cases, that Sipra, who was given eight months' start by the Chancellor of the Exchequer before he sent the fraud squad in after him, is now out there in another continent, writing novels and laughing at everybody in Britain, having got away with about £70 million from Johnson Matthey Bankers? Peter Cameron-Webb is out there in New York, having salted away £13 million, with his mate Peter Dixon in some other country. Yet the Attorney-General said yesterday at the Dispatch Box that we would have difficulty in getting those people back, and as a sort of cover-up, the Home Secretary says that we shall have to change trial by jury because we cannot get hold of them. What nonsense. The Government are not trying to catch them.

Mr. Hurd

The hon. Gentleman clearly has not listened either to what my right hon. and learned Friend told him yesterday or to anything that I have said today. I have not endorsed the particular proposal to which he has just referred. I have announced, or re-announced, a substantial expansion of Department of Trade and Industry staff to deal with fraud. I have answered a question about the Metropolitan and City company fraud department. I have moved a long way in the direction of showing that we are strengthening Government resources in precisely the direction that the hon. Gentleman wants, but there is no satisfying him. He sits there making his little perorations without listening to the answers that are given to him.

Sir Anthony Grant (Cambridgeshire, South-West)

Is my right hon. Friend aware that I agree entirely in broad principle with my hon. and learned Friend the Member for Fylde (Sir E. Gardner) about the maintenance of trial by jury? However, the reason that juries tend to convict in minor fraud cases, particularly in social security fraud cases, is because they understand them quite easily, whereas in major fraud cases, where large sums of money are involved, the standard tactic of the defence is to make those cases as complicated as possible. There is, therefore, a case for the Roskill recommendations, which I believe would prove to be a substantial deterrent to the major villains.

Mr. Hurd

There certainly is a case, and the House and the country will want to weigh that case. In addition, as I have already said, the Roskill report makes a number of other recommendations, a few of which I have mentioned. Visual aids are another recommendation. It is particularly cutting at the expense of the prolixity of lawyers, which was mentioned by my hon. Friend.

Mr. Douglas Hogg (Grantham)

Will my right hon. Friend accept that perhaps the most important recommendation in the report for making fraud trials more effective is the requirement that both the prosecution and the defence should state their case in writing? Will he please consider early legislation designed to achieve that end?

Mr. Hurd

Here again, there should be room for discussion. This is a radical recommendation, but my view is that it is almost certainly justified. We shall certainly find room in next Session's legislation for the radical changes in the Roskill report which, after a short period of deliberation, including debate in this House, are judged to be necessary.

Mr. Gerald Bermingham (St. Helens, South)

Does not the Home Secretary agree that, whereas all of us welcome the pursuit of the fraudster and the ultimate conviction of those who have committed fraud, we must also take into account the balance that has to be struck between the rights of the prosecution and the rights of the defence? In any steps that are taken in pursuit of Roskill, one must always remember that the paramount basis of all justice is even-handedness between the parties. Does not the Home Secretary agree that methods with regard to disclosure of case, the removal of committal proceedings in fraud cases and the jury system tend to go to the heart of justice?

Mr. Hurd

Certainly there should be time, which we propose to give, to consider what I certainly admit are sweeping changes. We shall look carefully at the views expressed on the Opposition Benches. They have pressed us on fraud for a long time. We shall watch carefully how the Opposition respond to our reform proposals.

Sir Dudley Smith (Warwick and Leamington)

Is my right hon. Friend aware that there is considerable public concern about the current jury system? Does he accept that, in due course, there must be several reforms of the jury system if public confidence is to be retained, as retained it must be?

Mr. Hurd

I think that the system of trial by jury for serious offences lies at the heart of our criminal justice system. The question is what changes are needed to clarify and purify it of any accretions or distortions. As my hon. Friend said, that goes wider than fraud. He knows that we have already set in hand an analytical exercise relating to peremptory challenge, and he will have noticed the caustic remarks that Roskill makes on that principle.

Mr. Donald Anderson (Swansea, East)

The Home Secretary will be aware of the alarming explosion in salary structures in the City over the past year. What realistic expectations does the right hon. Gentleman have of attracting people of quality from the private sector for short-term appointments?

Mr. Hurd

The hon. Member puts his finger on a difficult point. I am sure that my right hon. Friend the Chancellor of the Exchequer will show his characteristic generosity in considering that problem.

Mr. Toby Jessel (Twickenham)

Does my right hon. Friend agree with Lord Roskill that the system of peremptory challenge of jurors may … enable defendants to ensure that a sufficiently large part of a jury is rigged in their favour"? Does the right hon. Gentleman agree with Lord Roskill that peremptory challenges should "be abolished" as a matter of urgency?

Mr. Hurd

My hon. Friend was the first in the field on that, and I acknowledge that fact. He knows the Government's response on the general question, which was given to him before Lord Roskill reported. I do not want today to add to that.

Mr. David Winnick (Walsall, North)

Does the Home Secretary recognise that the Opposition's fears are the same as those mentioned by his hon. and learned Friend the Member for Fylde (Sir E. Gardner)? The abolition of juries in cases such as the Home Secretary has described could lead to the abolition of juries in certain other cases, on the basis of the same argument. That could happen, bearing in mind the Government's deplorable record on civil liberties—which is as bad as their record in dealing with serious commercial crime.

Mr. Hurd

The hon. Member is trying to have it both ways. If we are to be serious in pursuing fraudsters, as we are serious in the pursuit of drug traffickers, we must strike the right balance. The exact nature of that balance needs to be considered. The hon. Gentleman should not try to catch us in that trap. There is no reason why a system of tribunals for complex fraud cases should lead to an extension of the principle elsewhere. The Government would only do that if the House agreed and there is a perfectly good argument in the Roskill report for ring fencing that area of complex prosecution.

Mr. Ivor Stanbrook (Orpington)

In case it is thought that the diminution of the right of trial by jury is too high a price to pay for improving the system of prosecution of fraudsters, may I commend to my right hon. Friend the possibility of using the civil jurisdiction? That does not carry the difficulty surrounding juries. It makes available weapons that are not available to criminal jurisdiction. There would be a deterrent value in civil jurisdiction equal to that under criminal jurisdiction. Will that possibility be considered, as Roskill apparently did not consider it?

Mr. Hurd

Therefore, nor have I. I note my hon. Friend's point, but I doubt whether the one system could be a substitute for the other. If my hon. Friend would like to develop that point at greater length, I should be delighted to study it.

Mr. Chris Smith (Islington, South and Finsbury)

Does not the Home Secretary accept that the prospects of the abandonment of the right to trial by jury is bound to be the most controversial aspect of the Roskill report? By using such expressions as "powerful case" and "excellent basis for substantial legislation", the Home Secretary is likely to give the impression that the Government support that proposal in the Roskill report. Will he make it clear to the House the Government's current view about jury trial?

Mr. Hurd

We shall be having urgent consultations and will listen with interest to the views expressed in the House and in another place, and to general public comment. I made that point in my original statement on the Roskill recommendations on juries, which involve not only proposals about complex fraud cases, but a case for the abolition of peremptory challenge.

Mr. John Maples (Lewisham, West)

Will not my right hon. Friend agree that the right to trial by jury has been a fundamental right for a long time and that, whatever arguments there may be for changing the procedure for fraud trials, it would be a dangerous precedent to deny to those charged with one particular crime the rights enjoyed by those charged with other serious crimes?

Mr. Hurd

The longer this exchange continues, the wiser we are shown to have been in saying that there should be a little air around this set of proposals. There should be an opportunity for people to consider and discuss proposals before final decisions are made and the Government start drafting the Criminal Justice Bill for next Session.

Mr. Robin Corbett (Birmingham, Erdington)

Is there anything in the Roskill recommendations that would require Barclays bank to take immediate action to stop the apparently fraudulent misuse of its bankers' drafts, which has been going on since April 1985?

Mr. Hurd

No, Sir, and I have no intention of being drawn into particular cases which are not my responsibility.

Several Hon. Members


Mr. Speaker

Order. I will call those hon. Members who have been rising, but I would ask for brief questions, please.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

Will my right hon. Friend not be disheartened by the apparent difference between the hon. Member for Bolsover (Mr. Skinner), who thinks that the Home Secretary is not serious in his wish to catch fraudsters, and the right hon. Member for Manchester, Gorton (Mr. Kaufman), the Opposition spokesman on the matter, who thinks that my right hon. Friend is going too far? If we build an iron fence around the City within which fraudsters know that they are likely to be caught, prosecuted and convicted, that will be the best way to stop fraud. I thought that the Opposition were most keen to do that, as we are.

Mr. Hurd

I thought that, too. I am not in the least disheartened, because what I see, not only in Lord Roskill's report but in the business that follows today, is a clear opportunity for the Government to show, without any fear of contradiction, that they are determined further to tighten the work against fraud. I repeat my disappointment that we do not appear to have the Opposition's support in that.

Mr. Richard Hickmet (Glanford and Scunthorpe)

Will my right hon. Friend accept that, for many years, it has been considered a basic constitutional right that those who are prosecuted in Crown courts for criminal offences are found guilty only when the jury is satisfied beyond reasonable doubt of the offender's guilt? The proposition that that right should be removed—the right to jury trial—whether it is made in the House or in a report will be viewed with grave concern in the House and elsewhere.

Mr. Hurd

I take my hon. Friend's point.

Mr. Kenneth Hind (Lancashire, West)

Does my right hon. Friend agree that there are two aspects to the report? The first is the prosecution and defence in a trial of those accused of fraud. The other is investigation. Perhaps my right hon. Friend will consider that an essential act in that regard would be to place on company auditors an obligation to report irregularities either to the police or to the Department of Trade and Industry.

Mr. Hurd

Yes, I will consider that, although I believe that that goes wide of the report. A point not picked up in the exchanges is the commission that my right hon. Friend the Prime Minister has given to the Chief Secretary to the Treasury urgently to study the first of Lord Roskill's recommendations, which is for a unified system of investigation in bringing prosecutions. My hon. Friend's point goes a little wider than that, but I want to emphasise the importance of that decision.

Mr. David Ashby (Leicester, North-West)

Will my right hon. Friend accept that not only fraud cases but other ordinary crime cases are very complicated? Rather than throwing away the right to jury trial, which most of the House believes in, there is a case for having special juries in complicated cases. Jurors in such juries might be graduates from universities. Does he accept that, very often, peremptory challenges are used by lawyers to improve rather than to worsen the quality of the jury?

Mr. Hurd

The trouble is that people's ideas of quality sometimes vary in a strange way. My hon. Friend is correct to draw the attention of the House to the idea of special juries. That is an old idea which was recently revived in the columns of The Times and is now proposed by my hon. Friend. It did not find favour with Roskill, for the reasons set out in the report, but no doubt that will form part of the debate.

Mr. Richard Ottaway (Nottingham, North)

On an earlier occasion it was intimated that the courts' lack of jurisdiction to try conspirators to a crime where the conspiracy had taken place wholly in this country but the crime had taken place overseas—a common occurrence in frauds described in appendix F in the Roskill report—was to be dealt with by the Roskill committee. That has not happened. What plans does my right hon. Friend have to block that loophole?

Mr. Hurd

Perhaps my hon. Friend will allow me to look into that matter, as I would rather not answer him off the cuff.

Mr. Tony Baldry (Banbury)

Will my right hon. Friend agree that the jury's purpose is to determine the facts according to the evidence? Very often, that is exceedingly difficult in cases of serious fraud for jurors without experience of accountancy or of how computers operate. In such cases, it is difficult for jurors fairly and justly to determine the facts, and that can lead to injustice. Injustice against one is injustice against us all.

Mr. Hurd

That is a good summary of the main thrust of Lord Roskill's critique. We have to take a little time before setting our decisions in concrete.

Mr. Ivan Lawrence (Burton)

I welcome my right hon. Friend's wise caution over the abolition of jury trials and peremptory challenge. Will he consider an area over which there will be much less disagreement, which is the enormous expense involved for the state in prosecuting fraud trials, which often go on at great length and are the subject of legal aid? Will he consider extending the inquiry initiated by a former Solicitor-General into requiring defendants in long cases to have to prove their need for legal aid? If they were subjected to long and thorough inquiries, perhaps few would want legal aid. The cost to the state would be much reduced and the length of trials would be reduced accordingly.

Mr. Hurd

I will draw the attention of my noble Friend the Lord Chancellor to the point made by my hon. And learned Friend. The thrust of Lord Roskill's report is that trials are often too slow in coming on and in wending their way to a conclusion. Many of his recommendations are designed to shorten both processes, and thus to reduce the cost.

My hon. and learned Friend said that I was right to be cautious and that is probably true, but I hope that the House will not be in any doubt about our determination to pursue this analysis and to put into legislation in the next Session some changes that may be controversial, but which will be immensely important. I hope that no one thinks that, because we are being cautious and are not leaping to immediate conclusions, we shall not take the earliest possible opportunity to tighten the noose around fraud.

Mr. D. N. Campbell-Savours (Workington)

Are deficiences in the present legal system preventing police from bringing prosecutions from fraud?

Mr. Hurd

I am not quite sure what point the hon. Gentleman is on. Roskill shows that the legal and administrative machinery in this area is creaking—I have acknowledged that frankly—and he puts forward proposals for making the machinery in both areas run more smoothly.

Mr. Kaufman

The Secretary of State cannot be allowed to get away with giving the impression that the Government have become crusaders against fraud. Apart from the reaction on both sides of the House to the proposal for the abolition of the right to jury trial in complex cases, the right hon. Gentleman's statement wraps in rhetoric a failure to respond positively to a single one of the specific proposals by Roskill, whereas the Opposition have already called on the Government to adopt several of the specific proposals that we support.

This belated Government action would never have come about without the strong pressure from the Opposition—from both the Front Bench and Back Benches—over a prolonged period. When the Government show the determination against fraud that the Labour party has shown, we shall begin to take them seriously.

Mr. Hurd

I think that the chronology on the record contradicts what the right hon. Gentleman has said. Certainly, we are crusaders against fraud. I had hoped to carry the right hon. Gentleman with me, but after his first intervention I doubted whether that would be possible, because he seemed to be lukewarm about the matter and anxious to make small points. I hope that his second, more angry, intervention suggests that he is also a crusader.