Lords Sitting of 22 April 2002

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Bradford.
Lord Foster of Thames Bank—Took the Oath.
Lord Blyth of Rowington—Took the Oath.

Special Advisers
Lord Sheldonasked Her Majesty's Government:
What consideration they are giving to the role of specialist advisers following recent remarks by the Cabinet Secretary, Sir Richard Wilson.
The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Lord Macdonald of Tradeston): My Lords, the Government plan to issue a discussion paper to invite views on what should be included in legislation for the Civil Service. It will take full account of the views expressed by Sir Richard Wilson in his speech of 26th March on the Civil Service.
Lord Sheldon: My Lords, is my noble friend aware that Sir Richard Wilson has pointed out that in what he calls his 'junior years", he came close to being instructed by special advisers and that that was a very serious matter? More recently, the Select Committee on Public Administration has taken evidence which demonstrates that special advisers have come close to taking positions at higher levels within the machinery of government. Is that not a rather serious matter, given that the Government do not allow special advisers to appear before Select Committees? If special advisers are to hold such powers, is it not essential that the Government relax their views and allow advisers to
2
appear before Select Committees in order to explain what it is they do for their money and in order to meet their responsibilities?
Lord Macdonald of Tradeston: My Lords, it is for Ministers to decide who should appear on their behalf before Select Committees. I believe that the case the noble Lord may be referring to related to one of our unpaid advisers who was a Member of this House. All the arguments implied by the noble Lord will be fully taken into account in the consultation which has been planned on the basis of a paper to be issued shortly.
Lord Campbell of Croy: My Lords, is it still the case that special advisers cannot give instructions to civil servants except for two who have been specially nominated for that purpose? Is that still the situation?
Lord Macdonald of Tradeston: My Lords, that is indeed the case.
Lord McNally: My Lords, does the Minister agree that, over recent years, we have moved dangerously far away from the concept of the man in Whitehall knowing best to the concept of the man in Whitehall knowing nothing at all? In that respect, does the Minister join in the general welcome for the appointment of a career civil servant, Sir Andrew Turnbull, to the post of Head of the Civil Service? Does the Minister not agree that, as well as producing Civil Service legislation, it would be a good idea to give Sir Andrew a mandate to create a Civil Service for the 21st century that is flexible enough to use outside talent, but which also combines the old ethos of public service and political neutrality? Those have been the strengths of the British Civil Service for 130 years.
Lord Macdonald of Tradeston: My Lords, I do not believe that it is necessary to give Sir Andrew any kind of mandate because, as I say, a consultation document is to be issued and every opportunity will be given to noble Lords and others to set out their views on the way forward for the Civil Service. I readily concur with

3
all the positive comments that have been made with regard to the Civil Service. In responding perhaps I may also pay tribute to the excellent work that has been carried out by Sir Richard Wilson over the past four years.
Lord Faulkner of Worcester: My Lords, does my noble friend agree that the tone of the remarks made by my noble friend Lord Sheldon was rather at variance with what was said by Sir Richard Wilson in his speech of 26th March, during which he commented to the effect that special advisers have a legitimate contribution to make to the working of government? He went on to say that he believed it was right for Ministers to be able to access special advisers to act as their political eyes and ears, to help departments understand their particular Minister, to work alongside officials on the Minister's behalf and to handle party political aspects of government business. In other words, I believe that Sir Richard Wilson endorsed the principle of special advisers and paid tribute to the work they do.
Lord Macdonald of Tradeston: My Lords, I would follow my noble friend by suggesting that noble Lords should take the opportunity to read what Sir Richard Wilson had to say. No doubt his speech will inform the documents being drawn up by the Government and will inform the discussions during the consultation period that is to follow.
Lord Jenkin of Roding: My Lords, it may be rather a long time since I was a Minister, but at that time a clear distinction was drawn between those specialist advisers brought in to disseminate their special knowledge and experience in their advice to departmental Ministers, and political advisers, who were able to help Ministers with the functions just referred to by the noble Lord, Lord Faulkner. Is it not desirable that those very clear distinctions should be re-established? I refer, for example, to the rule that political advisers should resign the moment an election is called.
Lord Macdonald of Tradeston: My Lords, it is indeed the case that they resign when an election is called. I take the noble Lord's point about the distinction between political advisers and expert advisers. That will be one of the issues in the forthcoming consultation.
Lord Saatchi: My Lords, is it not the Government's insistence on centrally managed command and control of micro targets throughout the public services that explains both why the targets are rarely met and why so many people feel that the impartiality and neutrality of the Civil Service is being compromised?
Lord Macdonald of Tradeston: My Lords, I do not believe that to be the case. The role of special advisers is in the development and presentation of policy. There are 81 special advisers and a senior Civil Service of almost 3,500, so there is no shortage of competent civil servants to drive policy.
Lord Barnett: My Lords, does my noble friend agree that it does not help the interests of transparency and accountability when the officials involved, whether paid or not, refuse to attend Select Committees of either House, and that the Government do not help by advising them not to? Will this be considered in the review to which my noble friend referred?
Lord Macdonald of Tradeston: My Lords, it is an issue which could no doubt be raised. However, I would again suggest that noble Lords should support the primacy of government Ministers in deciding who should represent them at Select Committees.
Lord Strathclyde: My Lords, will the Government consider supporting the request that I have made to the Committee on Standards in Public Life—that is, that all those who advise government, including prime ministerial advisers, should be obliged to give evidence to committees of both Houses, and that we should change the rules of Parliament to oblige Members of this House to give evidence to Select Committees and, at the same time, to oblige government Ministers to give evidence to Select Committees of this House?
Lord Macdonald of Tradeston: My Lords, I readily accept this will be an important issue in the consultation that is to follow. I am sure that the noble Lord will put it as eloquently then as he does now.

Zambia and Zimbabwe: Recent Elections
2.45 p.m.
Lord Steel of Aikwoodasked Her Majesty's Government:
What policies they are pursuing internationally in respect of the elections in Zambia and Zimbabwe.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Amos): My Lords, our policy towards both Zambia and Zimbabwe, in the aftermath of their respective elections, is to promote democracy, prosperity, good governance and respect for human rights and the rule of law.
Lord Steel of Aikwood: My Lords, does the Minister agree that, while everyone recognises the fraudulence of the election in Zimbabwe because of the violence that accompanied it, very little attention has been paid to the December election in Zambia, which was roundly condemned by the European Union monitors, by the Carter Center in the USA and by the local monitors? Is it not time that we had a consistent policy within the FCO, including our trade and aid policy, to encourage genuine democracies and penalise the fraudsters? Should we not pursue that policy within the EU and the Commonwealth?
Baroness Amos: My Lords, our policy is entirely consistent. While a number of comparisons have been made between Zambia and Zimbabwe, it is important

5
to recognise that the circumstances are different. Although I accept the noble Lord's point that the European Union made it absolutely clear that the result of the election was not an accurate reflection of the will of the Zambian people, the elections in Zambia were calm, international observers were present—indeed, they had been invited by the Zambian Government—and there was a vigorous free press. That contrasts strongly with what happened in Zimbabwe, where we know that the elections were characterised by violence and intimidation, there were restrictions on freedom of expression and assembly, and there was manipulation of the electoral administration and court. Immediately after the elections in Zambia we had no ministerial contact with the new Zambian Government. We have entered into an EU dialogue under article 8. The House will know that the article 96 dialogue with the Government of Zimbabwe has failed. We shall continue to pursue a multilateral course in respect of Zimbabwe but, given what President Mwanawasa has done in terms of trying to tackle corruption—and while we remain robust with Zambia about the need for free and fair elections—we are engaging in a different kind of dialogue with that government.
Lord Howell of Guildford: My Lords, given that every day brings more evidence of the way in which the recent Zimbabwean elections were blatantly rigged —indeed, the Minister has just reinforced that point—what are we going to do to help the oppressed people of Zimbabwe to achieve fresh elections? Do we favour dialogue with Mugabe or merely that every conceivable kind of pressure should be put on him to ensure that elections are re-run? Now that there is a hint of peace in the Democratic Republic of Congo, will that affect the situation in Zimbabwe given that much of Mugabe's money came from that source?
Baroness Amos: My Lords, as to our continuing strategy with Zimbabwe, the South African and Nigerian Governments are pursuing a process of dialogue between the MDC and Zanu PF. This was mentioned in the outcome of the Commonwealth troika earlier this year which agreed to suspend Zimbabwe from the councils of the Commonwealth. We are supporting whatever dialogue we can. As to our own relationship with Zimbabwe, we continue to work through our EU colleagues and we continue to talk to our SADC partners, the United States and others about the continuing violence. Ten members of the opposition have been killed since the elections and we remain concerned about that. We continue to put pressure on Zimbabwe. The noble Lord may be aware that the EU put a motion to the Commission on Human Rights in Geneva last week, which unfortunately was not taken because a no action motion was carried.
Noble Lords will be aware that the inter-Congolese dialogue process on peace in the DRC failed over the weekend. We are concerned about that and we shall continue to do what we can to ensure that all the parties in the Great Lakes conflict abide by the decisions that have already been taken.
Lord Redesdale: My Lords, following the Minister's earlier Answer, now that dialogue has been entered into with the new Zambian administration, do the Government recognise that administration?
Baroness Amos: My Lords, I think that we have said in this House before that we recognise states,, not governments.
Lord Elton: My Lords, has not Mr Mugabe already proved himself to be entirely immune to persuasion by dialogue? What other pressures are to be brought to bear on him to secure a democratic state in Zimbabwe?
Baroness Amos: My Lords, we have said consistently that any pressure that Robert Mugabe and the Government of Zimbabwe take notice of will come from within the continent of Africa. It is important that we support initiatives from within Africa such as the current dialogue process promoted by the South Africans and Nigerians. As for continuing pressures, noble Lords will know that a number of countries now have sanctions against Zimbabwe, including asset freezing and travel baits. In addition, I mentioned the motion that the European Union sought to bring last week on human rights in Zimbabwe. There is also a continuing Commonwealth process, which will be reviewed after a year.
Lord Avebury: My Lords, with reference to the economic measures taken against Zimbabwe, has the Minister noticed that the regime has just imported more than 250,000 dollars-worth of luxury Mercedes limousines, including an armour-plated one for the use of President Mugabe? Should not the European Union sanctions be extended to cover such goods, which are intended for the use of the leaders of the regime?
Baroness Amos: My Lords, we have always made it clear that whatever sanctions are put in place should not affect the poor of Zimbabwe. I completely take the noble Lord's point about the importation of luxury vehicles. The European Union has made it clear that we shall go back to the issue of measures at the GAC in May. We continue to be concerned about the humanitarian situation in Zimbabwe, but we shall do all that we can to hit the members of the regime. That is where our sanctions are targeted.

Police Retention
2.53 p.m.
Lord Burnhamasked Her Majesty's Government:
Whether they intend to require policemen who wish to continue to serve after the end of their normal term to sign a four-year contract.
The Minister of State, Home Office (Lord Rooker): My Lords, I recognise the noble Lord's long-standing interest in the issue, but I have to tell him that no final decisions have been taken on the details of a police retention scheme. The Police Negotiating Board is

7
considering a range of reform measures, which include flexible arrangements to allow managers to retain officers entitled to retire with maximum benefits where they wish to do so.
Lord Burnham: My Lords, my concern, which is widely broadcast in the police service, is that the Government will require a four-year service extension. Does the Minister agree that that is undesirable? Does he also agree that if police officers stay on after the end of their normal service, the Government are getting them cheap, because all that they have to pay is the difference between their salary and their pension rights?
Lord Rooker: My Lords, I understand the reasons behind the noble Lord's Question and his supplementary, but the whole issue is wrapped up in the current negotiations. Given that there is a conciliation process going on—indeed, there is to be a conciliation meeting this Friday, 26th April, before a full meeting of the board on 1st May—it would be counter-productive to try to debate on the Floor of the House the pros and cons of a negotiating process covering a range of police pay issues.

Sinn Fein MPs' Access to House of Lords
2.55 p.m.
Lord Lamont of Lerwickasked Her Majesty's Government:
Whether they have expressed, or intend to express, any views to the House of Lords' Offices Committee about where, if anywhere, Members of the House of Commons, who have offices there but have not taken the oath, may go in the House of Lords.
The Minister for Trade (Baroness Symons of Vernham Dean): My Lords, the Government have not expressed any views to the House of Lords' Offices Committee and have no intention of expressing a view. The privilege granted to Members of another place in your Lordships' House are matters for the Offices Committee and the House itself to decide.
Lord Lamont of Lerwick: My Lords, I thank the noble Baroness for that reply, which I assume she is giving as Deputy Leader of the House. Will she confirm that Members of the other place may normally take parties along the Line of Route, they may stand at the Bar of the House, they may walk the corridors, they may use the Library and they have access to the Members' Gallery without security checks? Since she has said that this is a House of Lords matter, does she agree that there is no reason why this House should follow the decision of the House of Commons? What interim instructions have been given to staff pending the decision of the relevant committee should Sinn Fein Members request access or try to gain access to this House? Will she undertake that this
8
House will have a debate and an opportunity to vote on the matter, as some of us strongly object to the decision made by the House of Commons if it affects this place?
Baroness Symons of Vernham Dean: My Lords, I confirm that I am answering the Question in the absence of my noble and learned friend the Leader of the House, who is unable to be in the House today. The noble Lord, Lord Lamont, is right. As the Members concerned have been given passes, they have access to public areas of the House of Lords. In addition, it is usual for Members of another place to have access to the four places that the noble Lord mentioned in his supplementary question. Pending a decision of your Lordships' House, access to those areas is currently not available to the Members of another place in question. Those matters will be discussed at the Administration and Works Sub-Committee on 30th April and will then come before the Offices Committee, which will consider its recommendation on 14th May. In due course, that will be referred to your Lordships' House in the usual way so that there will be an opportunity for your Lordships to take a decision on these matters.
Lord Waddington: My Lords, will the noble Baroness bear very much in mind that many of us feel that it would be an intolerable insult to those of our Members who have suffered at the hands of the IRA if murderers, apologists for murder and associates of murderers were to come anywhere near this place?
Baroness Symons of Vernham Dean: My Lords, I recognise that this is an issue on which feelings run very high. I am sure that all your Lordships recognise that there are those in this House who have suffered cruelly from terrorist activities. However, I remind your Lordships that we are engaged in a peace process at the moment and that many will wish to support that peace process in the way that was the case in another place. I stress that it will be a matter for your Lordships to decide. That opportunity will be presented in due course.
Lord Tebbit: My Lords, will the noble Baroness ensure that the committee considering these matters is given access to the information held by the security authorities concerning the intelligence-gathering of the IRA, which continues, and its purchase of modern weapons from Russia, which also continues, so that the committee can take a view on whether the IRA's partners, and possibly the Members in the other place, are fit to be trusted to come to this end of the corridor?
Baroness Symons of Vernham Dean: My Lords, I do not think that there would have been any question of allowing access to individuals thought to be a threat either in another place or in your Lordships' House. Of course I hope that all the available information that can be put before your Lordships is put before your Lordships, but I remind the House that some matters will, I am sure, be coming from very sensitive

9
intelligence sources and may not be readily available. I can only repeat that the sensitivity of the issue is fully recognised. However, not only will the Offices Committee have the opportunity to discuss it, your Lordships will have the opportunity to discuss it in due course thereafter.
Lord Dubs: My Lords, does my noble friend agree that, in principle, it would be unfortunate if this House were to adopt different practices regarding Members of another place than that place itself adopted? Would that not reflect badly on the overall running of the Palace of Westminster, and would there not have to be exceptionally good reasons for doing it? Is she also aware that at least one of the Members of Parliament in question is a Minister in Northern Ireland and serves in its Executive? The way in which some of the innuendoes have been cast today does not do the peace process any good.
Baroness Symons of Vernham Dean: My Lords, I agree in part with some of my noble friend's comments. I agree, for example, that it is not right to refer in your Lordships' House to Members of another place as they have sadly been referred to during these exchanges. However, I do not agree that, having said that the Government will not be expressing a view on the matter, I can now express a view as a member of the Government that would effectively reverse my original answer. I can only tell noble Lords that, in the first instance, they will have an opportunity to express their views in the Offices Committee. The leaders of all the political parties represented in your Lordships' House, the Convenor of the Cross-Benchers and the Whips will be on that Committee and will be able to express their views. Thereafter, the matter will come before your Lordships' House and every noble Lord will have the opportunity to express a view on it.
Baroness O'Cathain: My Lords, can the Minister say whether those individuals will be permitted those rights in the interim before the view of the House has been expressed?
Baroness Symons of Vernham Dean: My Lords, I thought that I had said that, in the interim, the passes allow access only to the public places in your Lordships' House. The issues of particular sensitivity mentioned by the noble Lord, Lord Lamont—standing at the Bar of the House to listen to our debates; use of the Library reading rooms; use of the Members' Gallery; and sponsored visits on the Line of Route round your Lordships' House—will be considered by the Offices Committee on 14th May.
Lord Roper: My Lords, without wishing to pre-empt discussion in the Administration and Works Sub-Committee and in the Offices Committee, may I say that we on these Benches believe that the decision to make the interim ban and to put the issue to the appropriate committees of the House is the correct one?
Baroness Symons of Vernham Dean: My Lords, I am delighted to hear the Chief Whip for the Liberal Democrats make such a very sensitive contribution.
Viscount Astor: My Lords, can the Minister say whether passes have been given to staff, researchers or assistants of those Members of another place who are part of Sinn Fein? If so, has there been any vetting or background checks?
Baroness Symons of Vernham Dean: My Lords, what I can tell your Lordships is that the applications for passes for researchers for the Members in question are being dealt with in the same way as they are for any other Member of another place.
Lord Stoddart of Swindon: My Lords, will that public access include the offices or the environs of the offices of former Secretaries of State for Northern Ireland who now serve in this House and may be at particular risk?
Baroness Symons of Vernham Dean: My Lords, as I understand it, Members of another place have access to the public parts of your Lordships' House. The public parts of your Lordships' House do not include the particular corridors on which particular Ministers, former Ministers or Members of the Opposition parties work. The sensitive issues are those that the noble Lord, Lord Lamont, mentioned and I have repeated in answering the noble Baroness, Lady O'Cathain.
Lord Strathclyde: My Lords, we all understand the needs of the peace process. However, does not the noble Baroness understand that what repulses people across the country is the sight of people elected to Parliament who refuse to take their seat but who still receive hundreds of thousands of pounds of taxpayers' money while at the same time carrying out some of the activities which my noble friend Lord Tebbit has just mentioned? Do the Government still believe that another place came to the right decision?
Baroness Symons of Vernham Dean: My Lords, the noble Lord will not be surprised to hear my answer. This is a matter for another place, and another place debated it. Another place also voted by 322 votes to 189 votes that they should go ahead on the basis with which all noble Lords are familiar.

Proceeds of Crime Bill
3.6 p.m.
Lord Rooker: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Rooker.)
On Question, Motion agreed to.
House in Committee accordingly.

11
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 agreed to.
Schedule 1 [Assets Recovery Agency]:
Baroness Buscombemoved Amendment No. 1:
Page 263, line 34, at end insert—
"( ) For the purposes of sub-paragraph (3), there shall be no more than 10 performance targets for any financial year and these targets shall relate specifically to the functions of the Agency."
The noble Baroness said: While the issue of performance targets set each year by the director of the assets recovery agency was the subject of considerable debate in another place, we felt it important to revisit this question and probe the Minister on whether the Government have thought more about it—particularly given that our concerns met with significant sympathy from the Government's own Back-Benchers.
We would like reassurances from the Minister that this open-ended desire for performance targets in Paragraph 8(3)(b) of Schedule 1—targets which need not relate to the director's objectives—will not in practice mean a plethora of targets that realistically cannot be met and indeed might compromise the entire function of the assets recovery agency. We are keen to ensure that the director will focus on a discrete number of realisable targets that genuinely contribute to the agency's effective operation. More importantly, we hope that that operation concentrates on the recovery of assets as opposed to economic targets. Although it would be nice to think that the assets recovery agency could pay its own expenses, that is not the aim of the exercise. I beg to move.
Lord Rooker: As the noble Baroness said, this issue has been discussed in another place—as have many other issues. The Bill was in another place for a long time and many of the issues which we shall be discussing have already been discussed there. To avoid repetition, I shall not make that point again. The Government are re-examining many of those issues.
The issue of agency targets has in fact been discussed on two previous occasions, and I understand that an amendment identical to Amendment No. 1 was tabled then. Although it is too early to say with any certainty what the targets will be, it might help our deliberations if I were to set out our broad thinking on the issue. Measures of the agency's output are likely to include targets relating to the number of confiscation orders obtained by the agency and the value of those orders; the number of successful civil recovery actions and the amounts recovered through that route; the number of successful taxation cases and the amounts recovered through that route; international co-operation over confiscation orders; the performance of the centre of excellence; the agency's financial performance, volume of output, quality of the service and efficiency and so forth; and the agency's involvement with the priorities of the Secretary of State and other government priorities.
12
We do not want to restrict the director's ability to draw up targets in terms of the number he may set or, indeed, to what they should relate. I fully accept the concerns expressed about a huge number of targets. However, at the end of the day in this case it is for the director to decide how many targets there should be according to his priorities and what he thinks he will be able to deliver. Frankly, if the director thinks that he should have 15, 20 or 30 targets, he should be able to put that number into his annual plan. We also anticipate specific targets being set in relation to Northern Ireland, which would increase the number of targets required.
The amendment would also require that the performance targets should relate specifically to the functions of the agency. The current provision requires the director to set objectives for the year but does not limit the targets he sets to those objectives. That is because he may want to set performance targets relating to functions which do not appear in his high-level objectives for the year. Paragraph 8(1) of Schedule 1 makes clear that while the director will be permitted to exercise only the functions he is given by statute, the annual plan must set out how he is to exercise those functions. In other words, it is not possible for the director to set performance targets that bear no relation to his functions. That is important because his functions are specifically laid down in the Bill.
The director will draw up his performance targets in his capacity as head of a non-ministerial department. That is not unique in Whitehall; there are several. It will be for him, with the agreement of the Secretary of State, to decide how many targets are appropriate. We should not place restrictions on the director in primary legislation.
Having given the noble Baroness an idea of the thinking behind the targets—certainly, we do not want to be prescriptive—I believe that, in the end, we should leave the matter to the director.
Baroness Buscombe: I thank the Minister for his response. Indeed, the fact that he has outlined some of the inclinations that underlie this clause is helpful to us. It has perhaps encouraged the Government to focus upon our concerns about a plethora of targets, which we all know from experience compromises the effective workings of any such organisation. I thank the Minister and, on that basis, beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.15 p.m.
Baroness Buscombemoved Amendment No. 2:
Page 264, line 20, at end insert—
"In section 15(1) of the Scotland Act 1998 insert—
"(e) he is the Director of the Assets Recovery Agency";
In section 123(1) of the Government of Wales Act 1998 insert—
"(e) he is the Director of the Assets Recovery Agency"."

13
The noble Baroness said: We believe that Amendment No. 2 is a straightforward amendment. It was suggested to us by the Law Society of Scotland. It provides for the disqualification of the director of the assets recovery agency from membership of the Scottish Parliament and the National Assembly for Wales. The Law Society of Scotland believes, and we in turn believe, that the amendment is necessary to fill the lacuna in the present drafting of the Bill. As the Bill stands, the director of the assets recovery agency would be disqualified from membership of the House of Commons and the Northern Ireland Assembly. However, there is no provision made for disqualification from the Scottish Parliament or the Welsh Assembly. I beg to move.
Lord Rooker: I am sure that the noble Baroness will be pleased if I say that, as was the position when identical amendments were tabled in the other place, we are in agreement with the principle behind them. Let there be no doubt about that. There is no obvious reason why the director could potentially become a Member of the Scottish Parliament or the Welsh Assembly 'while he could not be a Member of the House of Commons or the Northern Ireland Assembly. We promised in the other place that we would table amendments to the Bill in your Lordships' House if that was appropriate.
However, we have not done so because that would not be in accordance with the rationale behind the relevant provisions of the Scotland Act and the Government of Wales Act. It is worth putting on record the rationale, which was that, except as provided by the legislation establishing them, the new bodies should be left free to determine which office holders are disqualified from membership of that particular body. That is done by way of Orders in Council; in Scotland by the Scottish Parliament (Disqualification) Order 1999, and in Wales by the National Assembly for Wales (Disqualification) Order 1999.
Our view is, therefore, that the issue of disqualification from membership will best be achieved by means of amendments made to the relevant disqualification orders by the Scottish Parliament and the Welsh Assembly. That is subject to agreement by the devolved administrations that that would be desirable in the interests of consistency and political impartiality in this new important office.
I understand that the existing disqualification order for the Scottish Parliament is to be reviewed with the intention of a new order being made in good time before the next Scottish parliamentary elections in May 2003. I am able to give an undertaking that the director of the new assets recovery agency will be included in the new disqualification order when that time comes.
The position in respect of the Welsh Assembly is under consideration. It may be that disqualification is agreed in the interests of consistency. However, as the Welsh Assembly has no function in relation to crime or criminal justice—unlike the UK Parliament, the Northern Ireland Assembly and the Scottish
14
Parliament—the question of disqualification is not quite as straightforward. I believe that it is right to leave it to the Secretary of State for Wales to bring forward a draft order if he agrees that disqualification would be appropriate. In the circumstances, I invite the noble Baroness to withdraw the amendment. It is seductive, but on balance I believe that the matter should be left to the two bodies concerned. They have the means and the legal process with which to carry it out if they so choose. I have given a commitment in respect of the Scottish Parliament.
Baroness Carnegy of Lour: The answer given by the Minister was extremely interesting and helpful. I expect that my noble friend thinks the same; I do not know. In future can the Government consult with the devolved bodies when they are drafting Bills and such a matter arises? I can see why the Minister answered as he did. However, can the Government consult so that parliamentary time is not wasted here and in another place by having to answer such questions? Without my noble friend's question we would not have known of such matters. The Government could save themselves and noble Lords trouble. In future, would it be possible for the Government to think of that when drafting Bills and assure people of the position at Second Reading?
Lord Donaldson of Lymington: As a semi-outsider, I am a little puzzled. I understand why it should be a matter for the Scottish Parliament or the Welsh Assembly to decide who is eligible to become a Member. However, I am puzzled as to why it is not open to this House to decide that the director shall not apply to become a Member of either body, if, in the view of this place, it is undesirable that he should do so. That does not trespass on anyone's toes, as far as I know, except the director's.
Lord Rooker: I am not sure that I can reply specifically to the question asked by the noble and learned Lord, Lord Donaldson of Lymington. This is an important matter. As regards the question raised by the noble Baroness, Lady Carnegy of Lour, perhaps I may say that others will listen to what is said here on drafting. I do not know what the protocol would be if a Westminster Parliament Bill was drafted in such a way as to pre-empt a decision which was rightly one for the Scottish Parliament. As it has its own disqualification procedure, it should come under its own criminal justice system. I am all in favour of not having to repeat matters and of not wasting parliamentary time on a matter which could have been thought through before. It may be that a Bill is changed as it passes through the Westminster Parliament, which could change the rules for what is required. To pre-empt that would not make sense.
There seems to be a procedure, both in Wales and Scotland, for disqualifying from membership of those bodies someone who is in a high-profile, important public position where absolute political impartiality is required to the extent that the person shall not be a member of those two bodies. I believe that that is best

15
left to those two bodies. I shall probably need to take advice on the matter and, if need be, will write to the noble and learned Lord, Lord Donaldson, on the point that he raised.
Baroness Buscombe: I thank the Minister for his response. However, we would not be happy if the director could sit as a Member of the Welsh Assembly. Is it the Government's view that that would be acceptable?
Lord Rooker: I have made the point that this is an incredibly important position. Anyone who reads the powers in the Bill will recognise that. It is a public position. The utmost political impartiality is required. The nature of the functions of the Welsh Assembly are not the same as those of the Scottish Parliament, the Northern Ireland Assembly or the Westminster Parliament. Therefore, one must look at that narrow area. It will be for the Secretary of State for Wales to make that decision and bring forward an order if necessary. But the point is well made that, in order to show crystal-clear political impartiality, the situation might look bad, but as we all know perceptions are sometimes as important as the words in the statute.
We have the power to provide that the director should not be a Member of the Scottish Parliament or the Welsh Assembly, but as the Order in Council procedure is there we should use it. There is a process for dealing with the issue.
Baroness Buscombe: Having started out thinking that this was a fairly straightforward amendment, I am deeply concerned that someone could be a Member of the Welsh Assembly and at the same time hold down such an important position as the director of the assets recovery agency. However remote that possibility is, it could present an enormous conflict of interest. I also share the view of the noble and learned Lord, Lord Donaldson, that it seems grossly unjust that the Scottish Parliament and the Welsh Assembly should enjoy such freedom while we, in this Chamber, do not.
We shall consider the amendment with care. We shall most probably return to it on Report. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
The Attorney-General (Lord Goldsmith)moved Amendment No. 3:
After Schedule 1, insert the following new schedule—
"LIFESTYLE OFFENCES
Drug trafficking
1 (1) An offence under any of the following provisions of the Misuse of Drugs Act 1971 (c. 38)—

(a) section 4(2) or (3) (unlawful production or supply of controlled drugs);

(b) section 5(3) (possession of controlled drug with intent to supply);

(c) section 8 (permitting certain activities relating to controlled drugs);

16

(d) section 20 (assisting in or inducing the commission outside the UK of an offence punishable under a corresponding law).

(2) An offence under any of the following provisions of the Customs and Excise Management Act 1979 (c. 2) if it is committed in connection with a prohibition or restriction on importation or exportation which has effect by virtue of section 3 of the Misuse of Drugs Act 1971 (c. 38)—

(a) section 50(2) or (3) (improper importation of goods);

(b) section 68(2) (exportation of prohibited or restricted goods);

(c) section 170 (fraudulent evasion).

(3) An offence under either of the following provisions of the Criminal Justice (International Co-operation) Act 1990 (c. 5)—

(a) section 12 (manufacture or supply of a substance for the time being specified in Schedule 2 to that Act);

(b) section 19 (using a ship for illicit traffic in controlled drugs).

Money laundering
2 An offence under either of the following provisions of this Act—

(a) section 327 (concealing etc criminal property);

(b) section 328 (assisting another to retain criminal property).

People trafficking
3 An offence under section 25(1) of the Immigration Act 1971 (c. 77) (assisting illegal entry etc).
Arms trafficking
4 (1) An offence under either of the following provisions of the Customs and Excise Management Act 1979 (c. 2) if it is committed in connection with a firearm or ammunition—

(a) section 68(2) (exportation of prohibited goods);

(b) section 170 (fraudulent evasion).

(2) An offence under section 3(1) of the Firearms Act 1968 (c. 27) (dealing in firearms or ammunition by way of trade or business).
(3) In this paragraph "firearm" and "ammunition" have the same meanings as in section 57 of the Firearms Act 1968 (c. 27).
Counterfeiting
5 An offence under any of the following provisions of the Forgery and Counterfeiting Act 1981 (c. 45)—

(a) section 14 (making counterfeit notes or coins);

(b) section 15 (passing etc counterfeit notes or coins);

(c) section 16 (having counterfeit notes or coins);

(d) section 17 (making or possessing materials or equipment for counterfeiting).

Intellectual property
6 (1) An offence under any of the following provisions of the Copyright, Designs and Patents Act 1988 (c. 48)—

(a) section 107(1) (making or dealing in an article which infringes copyright);

(b) section 107(2) (making or possessing an article designed or adapted for making a copy of a copyright work);

(c) section 198(1) (making or dealing in an illicit recording);

(d) section 297A (making or dealing in unauthorised decoders).

(2) An offence under section 92(1), (2) or (3) of the Trade Marks Act 1994 (e. 26) (unauthorised use etc of trade mark).
Pimps and brothels
7 (1) An offence under any of the following provisions of the Sexual Offences Act 1956 (c. 69)—

(a) section 2 (procuring a woman by threats);

(b) section 3 (procuring a woman by false pretences);

17

(c) section 9 (procuring a defective woman to have sexual intercourse);

(d) section 22 (procuring a woman for prostitution);

(e) section 24 (detaining a woman in a brothel);

(f) section 28 (causing or encouraging prostitution etc of girl under 16);

(g) section 29 (causing or encouraging prostitution of defective woman);

(h) section 30 (man living on earnings of prostitution);

(i) section 31 (woman exercising control over prostitute);

(j) section 33 (keeping a brothel);

(k) section 34 (letting premises for use as brothel).

(2) An offence under section 5 of the Sexual Offences Act 1967 (c. 60) (living on the earnings of male prostitute).
Blackmail
8 An offence under section 21 of the Theft Act 1968 (c. 60) (blackmail).
Inchoate offences
9 (1) An offence of attempting, conspiring or inciting the commission of an offence specified in this Schedule.
(2) An offence of aiding, abetting, counselling or procuring the commission of such an offence."
The noble and learned Lord said: Amendment No. 3 is of importance and of interest to Members of the Committee because it determines which single offences will attract the criminal lifestyle provisions and therefore the application of the assumptions in Clause 11 and its equivalents in Parts 3 and 4 for Scotland and Northern Ireland.
The Marshalled List is quite long. It will therefore be convenient to consider with this amendment the other amendments on Clause 75, so that we can have a wide-ranging debate on this issue.
Technically, the effect of the government amendments is as follows: Amendments Nos. 3 and 81 transfer the existing criminal lifestyle offences—that is to say, drug trafficking and money laundering offences—to a new schedule, to which additional offences have been added. The proposal is to introduce a new power to add or remove further offences to the schedule by means of Amendment No. 86. Clause 451 is being amended to make this power subject to the affirmative resolution procedure by means of Amendments Nos. 293 and 296. That is in accordance with the recommendation of your Lordships' Delegated Powers and Regulatory Reform Committee.
At the same time, Amendment No. 81 deletes the previous proposal in Clause 75(2)(c) to proceed by way of regulation. Therefore, it is a schedule plus a power by order which is subject to affirmative resolution instead of the present provision for regulations.
Perhaps I may say at the outset that the Government have taken a very careful approach to this exercise. We have been mindful that the Bill as presently drafted already allows for a conviction for an offence to attract the assumptions where the offence has been committed over a period of six months or where it forms part of a course of criminal conduct as specified in Clause 75(3). We have taken the approach that offences should be included in the schedule only where a single conviction for that offence can normally be regarded as indicative of a criminal lifestyle.Members of the Committee may
18
be aware that my honourable friend the Parliamentary Under-Secretary of State provided in the other place at the end of last year a list of the types of conduct which the Government were considering for possible inclusion in the schedule. A copy of that, as I think I said at Second Reading, is available in the Library of the House.
However, on further consideration, the Government have decided that it would not be appropriate to include some of this conduct in the schedule either because there were technical difficulties in including certain offences or because we did not think after all that they were normally indicative of a criminal lifestyle.
I shall first discuss which of the offences fall into that category; that is, those which have been omitted from the list. First, there is forgery of travel and other immigration documents. In the case of the forgery of travel and other immigration documents and conspiracy to defraud the Crown, the offences that currently relate to this conduct are very broad. The Government think that they will catch many offenders whom one would not normally regard as having a criminal lifestyle. Forgery offences, for example, could catch a person who forged a student card for the purpose of obtaining admission to a pub or a club.
Secondly, there is child pornography. Of course that is a very serious kind of crime. It may be indicative of a criminal lifestyle. It is not acquisitive but psychopathological. Most of the traffic in such material that goes on across the Internet is believed to be on an exchange or no-fee basis. The lack of an acquisitive element leads us to conclude that the offence is not indicative of a criminal lifestyle, as the term is understood in the Bill. So it has been omitted from the schedule.
With regard to bribery, prosecutors note that it often seems to be an isolated event related to particular and temporary circumstances. Against that background it is difficult to justify the inclusion of that offence in the schedule.
Similarly, insider dealing is not thought to be any more indicative of a criminal lifestyle than an offence such as theft, which is not included. It is not an activity typical of organised crime. The criminal law on insider dealing also works alongside a civil code of market conduct and rules of investment exchanges. That regime is designed to ensure that insider dealing does not occur on a systematic basis. So it is again omitted.
Terrorism has of course given us a great deal of food for thought. The list circulated in the other place talks in terms of including terrorist funding offences. But, on careful reflection, we have decided that it would not be appropriate to include these offences. They are very much concerned with the idea of raising funds for use in terrorism. As such, it is difficult to see how they could be regarded as indicative of the kind of offender who is involved in acquisitive crime.
Examination of that issue has lead to an acute awareness of the extent to which terrorists are involved in racketeering for their own benefit, particularly in Northern Ireland. The Government believe that it

19
would be wrong to overlook the evidence of their involvement in other acquisitive crime. As a result, we have been exploring which if any, offences in the Terrorism Act 2000 might justify the assumption in the case of these individuals of a criminal lifestyle. In the light of that exercise, a further amendment to the schedule will be presented for the consideration of Members of the Committee on Report.
So far as concerns money laundering, I should mention that in transferring the offences of money laundering from Clause 75(2)(b) into the schedule, we have decided not to include Clause 329 of the Bill—that is the acquisition, use and possession of criminal property—because we recognise that that offence is very broad and that there will be many cases where it is not indicative of a criminal lifestyle. Clauses 327—concealment of criminal property—and 328, dealing with certain arrangements, are, however, properly included.
I have set out—I hope that Members of the Committee do not think at too much length—the thinking on the omitted offences partly because the Committee will want to know why certain offences are not included but partly also to emphasise the cautious approach which the Government have taken to the issue. The Government are well aware of the consequences that can flow from a finding of a criminal lifestyle. For that reason, where there is doubt as to whether an offence should be specified as a criminal lifestyle offence the approach has been to exclude it. It will, of course, be possible to add offences at a later date or even remove them by means of the order-making power if the Secretary of State considers that justified and if Parliament so approves by affirmative resolution.
I turn now to the offences listed in the new schedule. In the main, they are self-explanatory, but I should like to make a few general comments about them. People trafficking is an issue of international as well as national concern, and I should be surprised if there were any controversy about including it in the schedule. Similarly, arms trafficking, like people trafficking and drug trafficking, is lucrative criminal conduct typical of organised crime.
I should perhaps add that we will need to revisit the facilitation offence in the light of the new offences in the Nationality, Immigration and Asylum Bill recently introduced in another place. If it is appropriate to specify offences in the new Bill, we shall do so.
The involvement of professional criminals in the manufacture and circulation of counterfeit currency and other merchandise is well known and the counterfeiting offences are included for that reason.
The reasoning underlying the inclusion of piracy offences—piracy in the sense of intellectual property, rather than any other kind—is similar. They are offences from which we know that professional criminals are making a handsome living. The offences are not particularly serious in sentencing terms, but we are here concerned with their capacity to generate
20
revenue for those committing them. They are not offences that are committed accidentally or in isolation.
In relation to pimps and brothels, perhaps I may mention that at least one large confiscation order has been made under current legislation following a multiple conviction for brothel-keeping offences. The inclusion of sexual offences as a whole reflects our desire to attack the large profits made from sexual exploitation in all its forms.
Finally, I should make some comment on the offence of blackmail, which was not in the list circulated in the other place but which the Government now think should be included. The label of the offence may be slightly misleading. As Members of the Committee will be aware, English law makes no distinction between blackmail and extortion. I make it clear that the target of our attention in this instance is what people commonly refer to as extortion. That form of criminal conduct is quintessentially associated with organised crime, protection rackets and paramilitary racketeering in Northern Ireland.
The Government believe that the new schedule is a major improvement to the Bill, and I hope that the Committee will agree. It places the criminal lifestyle regime on a more coherent, rounded footing and will expose acquisitive criminals to more effective treatment than is presently possible. We intend to propose a list of parallel offences relating to Northern Ireland and Scotland.
I hope that in the light of my explanation, the Committee will support the new schedule, together with Amendments Nos. 81, 86, 293 and 296.
3.30 p.m.
Lord Goodhart: To clarify one point, would I be right to assume that where there was a single instance of insider dealing from which a substantial profit had been made, that profit could be recovered by a confiscation order on the basis of particular conduct or under a civil recovery order?
Lord Goldsmith: Yes, the noble Lord is entirely right. The provision does not affect particular criminal conduct; we are here concerned with offences that attract the general conduct provision and the assumptions that then apply.
We shall oppose the Motion that Clauses 88 and 89 stand part of the Bill, because they were simply a way to include drug trafficking and money laundering offences, as we now propose to do in the schedule.
Amendments Nos. 73 to 75 and 190 would prevent a confiscation order from being made following a conviction in the magistrates' court unless the offences were punishable by imprisonment. Amendment No. 74 would prevent a confiscation order from being made following a conviction in the magistrates' court unless the offences were triable on indictment. In other words, it would exclude either way offences.
The effect of Amendment No. 75 would be that when it committed a defendant to the Crown Court for confiscation, the magistrates' court would not also

21
have to state whether or not it would also have committed the defendant for sentencing under its existing powers. That might have the effect of limiting a Crown Court dealing with an offender committed to it for confiscation to the sentencing powers of the magistrates' court, even if the case were one in which the magistrates' court would have committed the offender to the Crown Court for sentence.
Many of the reasons why the Government oppose those amendments have already been covered in another place. I refer Members of the Committee to the Hansard reports of 15th November 2001 at cols. 107 to 116 and of 29th November 2001 at cols. 406 to 411. Our position on the issue is straightforward. The idea that one may exclude from confiscation any class of criminal conduct is unacceptable in principle. Apart from the practical possibility of significant proceeds being derived from some summary offending, that would be tantamount to saying that we have no objection to offenders retaining the proceeds of their crimes. If conduct constitutes a criminal offence—as summary conduct does—its proceeds should be liable to confiscation.
Indeed, the coverage of summary offending in confiscation legislation is nothing new. The Hodgson committee, whose 1984 report on the proceeds of crime and their recovery underlay the first confiscation legislation, was not only concerned with serious offending. The committee was also exercised with:
"contraventions of regulations that involve little or no public obloquy but where the profits made from the offence far outweigh, in many cases, any penalty exacted".
Hodgson referred to:
"the demolition of a listed building, the felling of protected trees, the systematic overloading of vehicles and the pollution of the environment"—
as—
"some of the ways in which huge profits are made from breaking the law".
The report considered whether it would be possible to limit confiscation to serious crime—perhaps defined as offences carrying the possible sanction of a prison sentence, but rejected this view. It considered that a serious crime approach would exclude many of the profitable regulatory offences which it clearly thought should be included. I await what is said when the amendments are moved, but the Government's approach is to include any summary offence, rather than the somewhat arbitrary listing that appears in existing legislation.
I turn to the proposed deletion of Clause 70(5). The subsection is required once the prosecutor has asked the magistrates' court to commit a person to the Crown Court for confiscation because, but for that provision, it may not indicate whether it would have committed the offender for sentence under existing powers. Without such an indication, the Crown Court would be limited to the sentencing power of the magistrates' court. That would not be correct if the magistrates' court would have committed the offender for sentence in any event.
22
Amendments Nos. 82, 136 and 196 would delete subsection (2)(c) from Clauses 75, 145 and 229. In the light of the Government's approach through the new schedule, they may not be pressed. I see the noble Baroness, Lady Buscombe, nodding, so I shall wait to hear what she says about them.
I turn to Amendment No. 195, which would add to Clause 29 in Part 4 the offence contained in Sections 11, 12 or 13 of the Terrorism Act 2000. Those sections concern membership of and support for a proscribed organisation and the wearing of uniforms. I suggest that none of those are inherently acquisitive offences, and we do not support the amendments for that reason.
I turn to opposition Amendments Nos. 79, 84, 85. 135, 138, 139, 190, 194, 198 and 199. They are all attempts to water down the effect of Clause 35. I think that I have already dealt with those amendments. If I have not, I shall come back to them, when they are moved.
I should mention Amendment No. 80. It is similar to those to which I have referred. It would exclude either-way offences from the application of the assumptions. It follows from what I said that the Government view the inclusion of either-way offences as even more appropriate than the inclusion of summary-only offences. I shall give an example. Either-way offences include theft. In its judicial capacity, your Lordships' House recently upheld the making of a general criminal conduct confiscation order for over £200,000 in the case of Rezvi. He had been convicted of two counts of theft. That is the existing legislation, and we do not want to row back from that.
I apologise for taking so much time, but I hope that I have indicated why we put forward our amendments and why we will resist the other amendments in the present grouping. I beg to move.
3.45 p.m.
Lord Thomas of Gresford: On behalf of those on the Liberal Democrat Benches, I welcome the clarification in the schedule and the adoption of the affirrnative procedure to extend the schedule at any future date.
I listened to the explanation given by the noble and learned Lord, Lord Goldsmith, relating to the other offences for which no acquisitive element cart be defined. I understand the Government's reasons for excluding those matters from the schedule. If we have the opportunity to consider the matter further, it will, I am sure, become quite acceptable. The rationale is entirely acceptable.
Particular lifestyle offences are referred to. Drug trafficking is very serious, and people trafficking is as profitable today-some say that it is more profitable than drug trafficking. I am pleased to see that it is dealt with in the schedule. Counterfeiting has always attracted substantial sentences of imprisonment. Offences relating to intellectual property can carry heavy sentences. Sentences of years are passed for counterfeiting. It is a profitable trade, and it is easily done. It involves international counterfeiting and is a

23
serious problem. I also follow the inclusion of blackmail in the terms to which the noble and learned Lord referred.
I regret to say that I do not accept the provisional explanation that the noble and learned Lord gave for resisting the amendments put forward by the Opposition. It is noticeable that all the lifestyle offences are serious matters; there is nothing trivial about them. It is a major leap from such matters to what is to be contained in Clause 75(2)(d), which refers to,
"conduct forming part of a course of criminal activity".
Such conduct is defined in subsection (3). All that is required are convictions for three or more offences. There is no qualification.
As the noble and learned Lord said, the matter was considered in the Hodgson report. The requirement in the clause refers to—or can refer to—all summary offences, particularly with regard to Clause 70. The noble and learned Lord said that the thrust of the legislation was to deal with profitable regulatory offences that did not carry sentences of imprisonment. The sort of matters that are referred to hardly come within the concept of a criminal lifestyle. A person who chops down trees or pollutes the atmosphere can hardly be described as having a criminal lifestyle. That is where I find a problem.
There must be some targeting of resources for all the provisions of the Bill. It is expensive—in time and resources—to take people to court to obtain orders under the existing legislation. I have some experience of that, as I said at Second Reading. It is time-consuming, and one would not want to see people brought to court for an order to be made under the new legislation in respect of trivial matters. Of course, the Director of Public Prosecutions—or the court, of its volition—must decide to make such an application.
I shall not address each of the amendments in my name and that of my noble friend Lord Goodhart, but I shall say that we are trying to place some reasonable limits on the extent to which the Bill should go. Consequently, we have suggested that, for the relevant parts of the Bill, a criminal lifestyle should be defined only with reference to the commission of crime that is punishable by imprisonment. Anything less than that takes the concept of a criminal lifestyle into the realms of absurdity and would not be acceptable. It is in that regard that I speak to our amendments. We will deal with them in due course.
Viscount Bledisloe: I wish to make one technical—but not entirely unimportant—point and ask the noble and learned Lord one question.
Amendment No. 3 would introduce a new schedule. There would be no provision in the Bill to tell us what the schedule was for or to what it relates. Such a provision would not exist unless we were to pass Amendment No. 81. Surely, the right way in which to draft the amendments and present them to the Committee would have been to propose Amendment
24
No. 81—to introduce the schedule—first and then propose the amendment that includes the schedule itself.
I accept that it is unlikely that Amendment No. 3 will be passed and Amendment No. 81 not. However, for anyone coming to the matter fresh, it would make things difficult to have an amendment introducing an entirely new schedule with no introduction and no clue as to what it is doing before one gets to Amendment No. 81. There is no difficulty. The schedule to be inserted by Amendment No. 3 must come after Schedule 1 because it comes before Schedule 2, which relates to Clause 140. Amendment No. 3 could easily have been presented after Amendment No. 81.
The noble and learned Lord said that the offence that he had in mind was gang extortion. Will the offence cover all forms of blackmail? For example, a disappointed mistress may say to a man that unless she is sent some money, she will publish details of his misdoings in the paper. That is not a criminal lifestyle. If the clause would cover such things, is it not too wide? Should it not be limited in some way to organised and—so to speak— professional extortion?
Viscount Goschen: In the noble and learned Lord's introductory remarks he took care to discuss certain offences which were not to be included in the new schedule. Among those he listed that of terrorism activity and pointed to a future amendment that the Government may bring forward which would add some detail.
First, I wonder whether, at this early stage of our consideration in Committee, the noble and learned Lord can go a little further in clarifying the degree to which the Bill could be used, and should be used, towards addressing the racketeering activities of terrorist groups. Clearly a reading of the offences under "lifestyle offences" which are included within the new schedule, such as drug trafficking, money laundering and arms trafficking in particular, may lead one to consider that the racketeering activities of certain terrorist groups, particularly those within Northern Ireland, would be squarely caught. So anything further that the Minister could say at this stage would accelerate our proceedings as these matters are likely to come up on a number of other occasions.
Secondly, will the Minister accept that the list to determine whether or not a criminal lifestyle is being enjoyed by a specific individual should be used with care? It does not in fact give a definitive indication both in terms of the offences omitted—there are proper reasons why that should be so—and also on the question of degree. To take one example, I looked at the paragraph on intellectual property. Paragraph 6(1)(c)refers to,
"making or dealing in an illicit recording".
One can envisage circumstances where someone makes a recording of a CD for their own personal use, or downloads an MP3 file from the Internet, thereby stealing someone else's intellectual property. I understand that the law is still somewhat of a grey area

25
in connection with those issues and that the person could therefore be considered as enjoying a criminal lifestyle. Will the noble and learned Lord clarify whether or not, under those circumstances, that activity would be caught and whether, on an overall basis, the Government accept that this list should be treated with care?
The Earl of Mar and Kellie: Will the noble and learned Lord clarify a point for me? I may well have got the wrong end of the stick on this point. Believe it or not I am going to talk about cutting down trees and I am also going to talk about intimidation, though not necessarily at the same time.
Intimidation is excluded from this provision. Is somebody enjoying a criminal lifestyle who regularly makes a habit of intimidating competitors so that they go away and the person is then able to purchase property, for example, at a lower than market value because there was no competition? Similarly, a developer may buy a site, cut down trees, improve views and, more to the point, improve site value and therefore, by acting in that, on the face of it, minor illegal way—cutting down trees without a licence—clearly acquire a lot more money as a result. Is he leading a criminal lifestyle?
Lord Williamson of Horton: Can the noble and learned Lord say whether, when producing this list of offences, the Government considered the issue of large-scale smuggling by organised gangs? The only reason I raise the point is that there is a considerable amount of money at issue. The Government have published figures showing a loss of revenue of £2.5 billion and therefore a large amount of money is swilling about in consequence.
I agree with the text of Amendment No. 3. I do not have any difficulty with it. But I should like to know whether or not this point was considered since it is a substantial amount of money which forms the proceeds of crime. That money goes somewhere and is not easily recovered.
Baroness Buscombe: I shall take this matter carefully. As the Attorney-General pointed out, a number of amendments are involved in this group and I want to be sure that I address the correct ones.
I thank the Minister for responding positively to concerns raised in another place by my honourable friends. The new schedule gives clarity and we have no doubt that it will considerably assist the assets recovery agency and the courts. The introduction of this new schedule much improves the Bill. Further, we are pleased with the important concession that all regulations made by the Secretary of State under this provision will be subject to an affirmative resolution of both Houses, in which case Amendment No. 82, which seeks to leave out Clause 75(2)(c), is unnecessary.
I was interested to hear what the Attorney-General said in relation to certain offences that are not listed. Perhaps I may refer to one in particular and use this as an excuse and an opportunity to make a plea to the noble and learned Lord. He referred to child
26
pornography, and in particular to child pornography on the Internet. We hope to hear from the Government in the near future that they will find a way to deal with that heinous crime. However, we understand that, since it is not acquisitive, this is not the proper place to deal with it and therefore entirely accept his argument on that point.
In his response to our amendment referring to the Terrorism Act 2000, we understand the Minister to say that the Government will bring forward an amendment to take account of that point. Clearly racketeering is an important issue, as mentioned by my noble friend Lord Goschen. Indeed, I support my noble friend in his request for the Attorney-General to expand on that at this stage as it is so important and will assist us through the passage of this Bill.
We agree that a cautious approach should be taken to this matter. It will be helpful to hear the Attorney-General's response to the various questions concerning the parameters of the list. We heard what the Minister had to say with regard to Amendments Nos. 74 and 75 and so we shall not be moving them. That applies also to Amendment No. 80 and related amendments.
That said, in relation to Amendment No. 83, will the noble and learned Lord respond to the proposal to prevent a finding of a criminal lifestyle solely on the basis that a single offence has been committed which lasted for a period of at least six months? In our view, that category is unduly broad and any such offences should be specified under the new schedule of lifestyle offences proposed by the Government.
I am perhaps less concerned about the parameters of the schedule depending upon the Government's response to a proposal that I shall put forward when we reach Amendment No. 13, which relates specifically to the discretion of the court. On that basis I shall not press any of the amendments we tabled following on from Amendment No. 3 and await with interest the Minister's response.
Lord Goodhart: Perhaps I may intervene very briefly. While I can understand and appreciate the arguments in relation to the amendments to Clause 70, which would exclude arty power of the magistrates' court to commit a defendant to the Crown Court whether it was for general or specific criminal conduct, I do not entirely agree with the noble Baroness, Lady Buscombe, that the amendments to Clause 75 are inappropriate. I agree that it would not be right to limit those to indictable offences or to either way offences. However, there are serious arguments for saying that before one can describe someone as having a criminal lifestyle they must at least have committed offences which are punishable by imprisonment. If a person has demolished a listed building without planning consent, or committed another offence which does not carry imprisonment as a penalty, perhaps he or she should be pursued for profits made as a result of particular criminal conduct or for a civil recovery order. Even if committed on more than one occasion, it does not seem appropriate to decide that that constitutes a criminal lifestyle.

27
What kinds of offence are contemplated by paragraph (e)—the offence committed over a period of six months—and why is it necessary to include those as constituting a criminal lifestyle? If particular offences can be identified, I agree with the noble Baroness that they should be listed in the schedule.
Lord Goldsmith: First, I am grateful for the warm welcome that noble Lords have given to the proposed amendment. I have spent a number of years in practice close to the noble Viscount, Lord Bledisloe. I am well aware of his interest in technical matters. Amendment No. 81 forms part of the same grouping; the two plainly go together. I hope he will agree that his objections, although soundly based, do not give rise to any difficulty. Noble Lords well know where we are. As long as both amendments are passed, the purpose of the schedule will be clear.
I shall deal with some of the questions and return to the main points. The noble Viscount, Lord Bledisloe, also asked about the position in relation to blackmail. He is right. Because the offence under the Theft Act is a single offence it would cover a single instance of blackmail which did not constitute extortion. As a matter of English law, in the definition of the offence, there is no way of distinguishing between the one and the other.
However, there are two important safeguards. It is important to bear them in mind when considering that case and certain other cases. First, the order will not be made save where the prosecutor asks for confiscation. One would not expect that to take place if there were a single isolated instance of an opportunistic blackmail of the kind to which the noble Viscount referred. Secondly, under Clause 11 the court always has the power not to apply the assumptions if there might be a serious risk of injustice. That is a second safeguard against the instance where there would be an isolated example which, in the court's view, did not justify the finding.
As I made clear, whether to include blackmail was not an easy decision precisely because of the point to which the noble Viscount refers. It was thought on balance that it was right to do so in order to catch the important extortion and protection racketeering type of offences.
I turn to the relationship with terrorism to which the noble Viscount, Lord Goschen, and other noble Lords referred. We need to bear in mind that Section 23 of the Terrorism Act 2000 already sets out a discrete forfeiture scheme for persons convicted of those terrorist fund-raising offences. The scheme enables the forfeiture of funds which are intended for use in terrorism and other similar property. Theoretically, there is nothing to prevent a confiscation order under the Bill in respect of the benefit generated to the defendant by the offence as well as a forfeiture order under the 2000 Act in respect of the benefit generated for the terrorist cause. Those could be made in the same proceedings. I suggest that that would give the flexibility which the authorities require.
28
The Bill does not state that terrorist fund-raising is itself a criminal lifestyle offence and, therefore, does not trigger that set of provisions. The Government have not thought it appropriate that it should trigger those provisions. It is not clear that a single conviction for terrorist fund-raising would be indicative that the defendant is likely to be living off the proceeds of crime. It indicates that he has certain ideological or other convictions and political aspirations but not perhaps that he is a lifestyle criminal. That is the thinking underlying the existing provision. The Government are likely to return to the matter on Report. If I can provide the noble Viscount, Lord Goschen, before then with further information on the detail, I shall write to him.
The noble Earl, Lord Mar and Kellie, raised two points, including the question of environmental offences. Again in accordance with Government's overall approach, the question is whether a single conviction is indicative of a criminal lifestyle. The Government would not consider that appropriate. I shall come back to the issued raised by the noble Baroness, Lady Buscombe, and the noble Lord, Lord Goodhart, on Amendment No. 83, with regard to a series of offences committed over a period of time. I hope that I have indicated that a careful approach has been adopted in putting together the schedule.
I should mention two other examples which were referred to. The noble Lord, Lord Williamson, referred to smuggling. We are considering whether to include this sort of offence. His observations were helpful. We shall make our views known on Report.
The noble Viscount, Lord Goschen, referred to the copyright offence. The relevant definition of the offence—I hope that I have it right from recollection—involves making such a recording for sale or hire; in other words, it is for commercial purposes. Therefore, the example he gives of someone making it for his or her own purpose does not fall within the scheduled offence.
I turn to Amendment No. 83 and related amendments. Those seek to delete subsection (2)(e) from Clause 75. Subsection (2) specifies that a person has a criminal lifestyle,
"if it is an offence committed over a period of at least six months".
I suggest that most people will agree that where an offence is committed over a long period of time, and where profits have been acquired from it, it is clear that the person concerned is indulging in a criminal lifestyle. I was asked to give an example of that and the most obvious would probably be the case of a conspiracy where such conduct is often a protracted activity.
Once again—I mention the same two safeguards—the prosecutor, or the court if the prosecutor does not do so, would have to decide whether to seek such an order and it would be a matter for the court to decide whether in the circumstances of a particular case there would be a serious risk of injustice if the assumptions were applied. The Government suggest that those are sufficient safeguards to prevent injudicious use of this provision.

29
I remind the Committee—I may want to return to this point later in the debate—that the proposal in the Bill is not as tight in some respects as the present law. On the present criteria, for example, it depends whether there is one other offence in the preceding six months or two or more on the indictment in the same proceedings. We have made these provisions tighter for the purposes of consolidating and bringing the different parts of the legislation together.
In opening, I dealt with summary offences. Of course, the schedule does not include summary offences. This situation arises in circumstances where one of the other provisions—for example, the provision in relation to repeat offences—is triggered. It is important to bear that clearly in mind. Where there are repeat offences, whether a summary or an either-way offence or an indictable-only offence, the Committee may feel that that is strongly indicative of a criminal lifestyle. Again, the assumptions under the Act can be displaced. I shall return to that point. The assumptions arise only where an order is sought and the court has the ability to say that in a particular case there is a serious risk of injustice so the assumption will not be made. For those reasons the Government press Amendment No. 3 and related provisions and they continue to resist those amendments that are still being pursued.
On Question, amendment agreed to.
Clause 2 agreed to.
Clause 3 [Accreditation and training]:
Baroness Buscombemoved Amendment No. 4:
Page 2, line 24, at end insert—
"( ) The specific functions of the Agency are to trace and investigate ownership of property where there is a reasonable belief that possession of property is unlawful due to its being derived from criminal activity."
The noble Baroness said: Amendment No. 4 is grouped with Amendment No. 5, but I shall speak only to Amendment No. 4. The purpose of the amendment is to clarify the specific functions of the asset recovery agency.
Part 1 of the Bill—Clauses 1 to 5—deals with the establishment of the asset recovery agency. The establishment of the agency is intended as a measure to rationalise and to co-ordinate the recovery of assets tainted by criminality through confiscation, civil recovery, the exercise of revenue functions and the training of financial investigators.
Clauses 1 to 5 are silent as to the specific functions of the director of the asset recovery agency. Those functions are, as is said in the Explanatory Notes, to be found in other provisions of the legislation. However, it is noteworthy that the director of the agency is generally referred to only in conjunction with the existing powers of prosecutors and, in certain circumstances, the courts, to initiate, to process and to enforce confiscation proceedings. The exception is in relation to the provisions relating to civil forfeiture.
Clause 3, which sets out the duties of the director to set up accreditation and training programmes, is to be commended. Asset recovery and confiscation are complicated areas and the current arrangements have
30
suffered from a lack of expertise in the various agencies which currently deal with confiscation: the Crown Prosecution Service, the Inland Revenue, HM Customs amp; Excise and so on. One may also hope that the higher profile of confiscation and asset recovery may result in greater resources being devoted to the area. Practitioners will know that the Crown Prosecution Service and other agencies are extremely hard pressed in terms of personnel and continue to have staffing problems. I beg to move.
4.15 p.m.
Lord Rooker: In view of the brevity of the noble Baroness I shall not use my extensive notes. The noble Baroness is right that the director's functions are not laid out in one specific part of the Bill, but they are covered. Perhaps I can give a brief rundown of them. The director's functions will be, as set out in Parts 2 and 4, to initiate and pursue confiscation proceedings against convicted defendants in England, Wales and Northern Ireland; in Part 5 to recover the proceeds of crime by bringing civil recovery proceedings in England, Wales and Northern Ireland; in Part 6 to exercise revenue functions in the United Kingdom where there is a reasonable suspicion of the presence of the proceeds of crime; in Part 8 to carry out criminal confiscation and civil recovery investigations; in Part 11 to assist overseas public authorities to identify and recover the proceeds of crime (where an Order in Council is made under Part 11 to confer such functions on the director); in Clause 3 to provide training and to set up a system for the accreditation of financial investigators; in Clause 4(2) and Clause 432 to co-operate with other law enforcement agencies; and in Clause 5 to provide advice and assistance to the Secretary of State.
I hope that that brief summary will reinforce the fact that the functions of the director are in the Bill, but they are set out in the relevant parts, bearing in mind the functions deployed. It would be otiose to restate them all in one place in the Bill.
Baroness Buscombe: I thank the Minister for his response. I am sorry that he did not respond positively to what we believe is a helpful suggestion. It would be nice to have the functions of the asset recovery agency up front so that anyone considering the Bill, when it is an Act, will have them in a nutshell. I entirely understand what the Minister has said. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 5 not moved.]
Lord Rookermoved Amendment No. 6:
Page 2, line 25, leave out subsection (2).
The noble Lord said: In moving this amendment I shall speak also to Amendment No. 7. This amendment clarifies that the director can provide different classes of accreditation for different purposes to financial investigators. We want to make it explicit that Clause 3 does not provide only for a single general training and accreditation scheme for financial

31
investigators. Financial investigators can be accredited for different purposes. That is appropriate because we expect different types of financial investigators to exercise different functions under the Bill.
Parts 2, 4 and 8 of the Bill provide investigators with access to powers to restrain property and certain investigation powers. Access to those powers will be partly governed by the director. He will be able to accredit civilian investigators whom he considers, against established criteria, suitable to use the relevant powers in the Bill. He may accredit investigators to use only the powers under Parts 2 and 4, to use only the powers under Part 8 or to use all the powers given to financial investigators under the Bill.
The investigation powers for which accreditation may be granted are production orders; search warrants; customer information orders (circulars to banks requiring them to report any account held by a person under investigation); and account monitoring orders (orders requiring a bank or other financial institution to provide transaction information on a suspect account for a specified period). The latter two are new powers. The customer information order will require the authorisation of a senior officer before an application can be made. We envisage that there will be a separate form of accreditation for those who are to authorise applications. That is because the skills necessary to authorise applications are different from those necessary to make an application.
In summary, the amendment simply clarifies that civilian personnel will be able to be accredited to use the restraint powers, investigation powers or both. In addition, they may also be accredited to fulfil the role given to senior officers of authorising the use of such powers. I beg to move.
On Question, amendment agreed to.
Lord Rookermoved Amendment No. 7:
Page 2, line 31, at end insert—
"(3A) A person may be accredited—

(a) in relation to this Act;

(b) in relation to particular provisions of this Act.

(3B) But the accreditation may be limited to specified purposes.
(3C) A reference in this Act to an accredited financial investigator is to be construed accordingly."
On Question, amendment agreed to.
Clause 3, as amended, agreed to.
Clause 4 agreed to.
Clause 5 [Advice and assistance]:
Lord Kingslandmoved Amendment No. 8:
Page 3, line 11, at end insert—
"( ) Where there is dispute between the agencies as to the appropriate means of proceeding, the dispute shall be referred to the Secretary of State, or alternatively will be decided by a code to be drawn up by the Secretary of State prior to implementation."
The noble Lord said: The purpose of this amendment is to clarify the ARA's status and function in relation to the other investigative and prosecuting agencies.
32
To us at any rate, it is far from clear how the ARA's investigative functions and its functions in confiscation proceedings, will relate to those currently being exercised by the confiscation units of other prosecuting agencies. For example, Part 2 of the Bill, which deals with confiscation, makes clear that the director, the prosecutor or the court may initiate and maintain such proceedings.
In these circumstances one wonders whether there will be turf wars and, more importantly, how it will be decided which agency carries out the proceedings and enforces any judgment. For example, what happens if the prosecutor wishes to move to confiscation but the ARA does not? What about the reverse position?
Again, Part 10 of the Bill relates to the disclosure of information from the director and specifically refers to the disclosure of information to a prosecutor in the exercise of his or her functions under Parts 2 to 4 of the Bill. Will the ARA carry out investigations and pass on information to the prosecutor? If this is so, what are the implications for the existing confiscation and financial investigation units in the prosecuting agencies?
In general, one would wish for greater detail in relation to the actual functions of the ARA and its relationship with existing prosecuting agencies—in the exercise of their main functions in restraint and confiscation proceedings in particular and, to a lesser extent, in civil asset recovery proceedings. I beg to move.
Lord Rooker: As regards the points which the noble Lord, Lord Kingsland, has raised, it may be worth saying at the outset that the Bill provides that the director will share the confiscation functions of the law enforcement and prosecuting authorities in England, Wales and Northern Ireland. That will allow those authorities to ask the director to handle the financial investigation and confiscation aspects while they concentrate on the criminal investigation and proceedings.
Clearly, there are issues as to how the shared order will work in practice and that is recognised. It will be a key element in the memorandum of understanding drawn up between the agency and the enforcement and prosecuting authorities. That memorandum will serve to prevent turf wars because, with a new organisation, one has to be very careful to guard against such events being generated almost by accident.
The director will receive most of his cases from the law enforcement and prosecution authorities in the first place. He will need to keep in close contact during his investigations. As I have said, we envisage that there will be a memorandum of understanding. Guidance will be issued. It is intended to help the director. It will be for him to decide how to best exercise his functions.
I am not sure what the noble Lord, Lord Kingsland, said as regards doubts about the functions of the assets recovery agency. There is no question but that will be a formidable operation. Looking at the Bill and the

33
Notes on Clauses, one can see that it is a very important innovative step in terms of dealing with crime in this country.
As regards England, Wales and Northern Ireland, decisions will have to be made as to when a case should be referred to the director for possible civil recovery action because the possibility of taking forward a criminal prosecution has been ruled out.
We have made clear that decisions by law enforcement agencies as to whether or not to continue with a criminal investigation or to prosecute will be taken without reference to the possibility that civil recovery or taxation might subsequently be taken by the agency. Decisions will be taken in accordance with the normal evidential and public interest tests. We believe that that is the right approach because it will be a matter for the director to decide which of the cases referred to him by law enforcement authorities should be taken forward by him in the light of his objectives and resources.
I can confirm that the existing agencies are already considering which cases might be referred to the director once the agency has been established. But a considerable amount of detailed work, including that involved in preparing the memorandum of understanding, will have to await the appointment of the director. In the light of my comments I hope that noble Lords will appreciate that we do not see a need for the type of arrangements envisaged in the amendment. We actively oppose any role for the Secretary of State in taking what should be operational decisions.
Lord Kingsland: I thank the Minister very much indeed for his reply. Will the Committee have the opportunity to see the text of this memorandum of understanding at some early stage in the proceedings, perhaps at Report stage? The Minister also mentioned guidance, but by whom, to whom and about what? Perhaps the Minister can enlighten the House about that and give some idea as to when we might see a draft of such guidance.
Lord Rooker: We shall make sure that we publish everything that we possibly can. The guidance will come from the Secretary of State. It will be open to him to consult widely on it. It naturally follows that that he will want to consult the law enforcement and prosecuting authorities. I shall take advice on the memorandum and come back to the noble Lord on that matter. I do not know whether it will be in the public domain, although I suspect that most of it will be. I do not know the answer to that question, but I shall take advice and return to it later.
Lord Kingsland: To the extent that the director will be exercising his discretion to do or not to do something on the basis of the memorandum, will the Minister agree that it is important that it is in the public domain?
Lord Rooker: As I said earlier, I do not know whether all of it will be in the public domain. I said that
34
we would put everything we possibly can into that area. I indicated that the director will be guided by the number of cases he takes on as to the importance he gives to the matter. In addition, there is the question of his own resources. One does not know the number of cases which will go to the director. Consideration is now being given to the kinds of cases to be referred to him. We are some way down the road towards the agency being set up. The cases he takes up will depend on his resources. It will be for the director to explain in due course the decisions which he has taken.
I return to what I said earlier. We will put everything we can into the public domain, but I cannot say that the whole of the memorandum will be included. I do not know.
Lord Kingsland: I am most grateful to the Minister for that further reply. He will understand that we will wish to return to this matter at Report stage. I accept that the noble Lord will do his best to provide the Committee with further information. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
4.30 p.m.
Lord Brooke of Sutton Mandevillemoved Amendment No. 9:
After Clause 5, insert the following new clause—
"INVESTIGATIONS: ANONYMITY OF AGENCY STAFF AND OTHERS
(1) Where the Director is satisfied that there is good reason to believe that the conduct of an investigation or the safety of a nominated officer might be prejudiced if the identity of that officer were known, he may determine that the nominated officer shall have the benefit of anonymity.
(2) For the purposes of this section, a nominated officer is—

(a) a member of staff of the Agency, or

(b) an accredited financial investigator.

(3) Where, apart from this section, a nominated officer may be required for the purpose of exercising his functions in the conduct of an investigation to produce or show any written authority or otherwise to identify himself, a nominated officer with benefit of anonymity shall—

(a) not be required to produce or show any such authority or to so identify himself for the purpose of exercising his functions, and

(b) be accompanied by a constable who shall, on request by a person affected, identify himself as a constable and state that he is accompanied by a nominated officer.

(4) Where a nominated officer with benefit of anonymity exercises his functions in the conduct of an investigation in writing, such function shall be exercised in the name of the Agency and not in the name of the nominated officer with benefit of anonymity.
(5) Any document relating to proceedings arising out of an investigation where a nominated officer had benefit of anonymity shall not reveal the identity or address of a nominated officer with benefit of anonymity.
(6) For the purposes of this section, "investigation" means any investigation specified in section 336 other than a money laundering investigation."

35
The noble Lord said: It may be helpful if I describe the provenance and pedigree of the two proposed new clauses which stand in my name on the Marshalled List. They were tabled in another place on behalf of the Commons Select Committee on Northern Ireland Affairs, which is in the midst of an inquiry into the financing of terrorism in Northern Ireland which it has not yet concluded. The committee did, however, publish an interim report on 14th February in advance of the Report stage of the Bill in the Commons, on 26th and 27th February. The interim report described the committee's visit to Dublin as part of its inquiry because it felt that the visit and its findings had relevance to this Bill.
During that visit, committee members made the acquaintance of a similar agency to the assets recovery agency envisaged by the Bill; namely, the Criminal Assets Bureau, set up in the Republic in 1996, with a staff including officers of An Garda Siochána, Customs officers, tax inspectors, social security officials, professional lawyers and forensic accountants. Over the past five years, the bureau has recovered 21 million punts' worth of assets—aficionados can translate that figure into euros—through proceeds of crime actions. It has made social welfare savings of 1.25 million punts; and, to date, it has collected 28 million punts out of a total of 56 million punts demanded as tax on criminal assets. It is also said to have had a powerful deterrent effect among criminal classes which had previously considered themselves invulnerable.
In the interests of simplicity, perhaps I may quote paragraphs 6 and 7 of the committee's brief interim report:
"The Republic of Ireland's Criminal Assets Bureau deals with sophisticated and dangerous criminals, some of whom have paramilitary connections. In a number of cases these individuals, prior to the establishment of the Bureau, had evaded the law enforcement agencies by verbal and physical intimidation of both witnesses and officials. We were told that on occasion extreme violence had been used. Officers working for the Bureau are dealing with cases which it would frequently be difficult to pursue through other means without exposing staff to considerable personal risk.
The CAB is able to pursue these individuals both safely and effectively because its civilian personnel are protected by statutory anonymity. The Criminal Assets Bureau Act 1996 provides for officials to be vouched for by a member of the Garda rather than disclosing any warrant of appointment while engaged in a search or other activities; for the identity of the official to be disclosed only to the judge during court proceedings; and for the name of the Bureau to be substituted for the individual officer's name in certain correspondence. Disclosure of the identity of members, or former members, of staff, or of their families, is punishable by up to three years' imprisonment"
The proposed new clauses standing in my name are intended to introduce the same concepts into British legislation. I should make it clear that I have repeated verbatim the new clauses tabled in the Commons. Imitation is, of course, the sincerest form of flattery, but the majority of the Select Committee are survivors from the same Select Committee in the previous Parliament and are thus experienced in Northern Ireland and Irish affairs, and its chairman, Michael
36
Mates MP, is also a vice-chairman of the British-Irish Inter-Parliamentary Body and a former security Minister in Northern Ireland.
The other place had a good debate on Report on 27th February on these clauses and other matters, which lasted for at least an hour and a quarter (cols. 748–768 of the Official Report). The Minister. Mr Bob Ainsworth, wound up the debate briefly, the final paragraph of his speech being devoted specifically to these new clauses. He did an exemplary job of making it clear that, while he was not against the new clauses, he was not fully in favour of them either. However, he did say that he would do his best to ensure that the Government could do something that was effective if that was in any way possible. Since that amounted effectively to taking the matter away for consideration, the new clauses reappear in this House by way of probing amendments to verify where further consideration has so far reached. That seems to me a not unreasonable question, as the Minister in another place, while being even-handed, was unspecific, except implicitly, as to what he liked about the clauses and was explicitly unspecific about what he did not like.
In conclusion, perhaps I may pay brief tribute to the courage of officers of the same backgrounds in Northern Ireland as serve in the bureau in Dublin. In the previous Parliament, the Northern Ireland Affairs Select Committee, on which I then served, investigated the massive smuggling of fuel oil between the two jurisdictions within the island of Ireland, with a centre of gravity in South Armagh. I am, therefore, recently familiar with the bravery of Customs officers in Northern Ireland whose Treasury Minister I once was. More than a decade ago, when I was serving as a Minister in Northern Ireland, I could not speak too highly of the courage of Inland Revenue officers in terms of other forms of tax fraud in particular parts of the Province. I recall one occasion when we conducted a very large number of raids simultaneously, often on professional premises, backed up, of course, by the security forces. The papers seized, as with the late Mr Al Capone in Chicago in the 1930s, proved amply an inattention to tax detail on the part of taxpayers, or perhaps more precisely non-taxpayers, who had believed that violence had placed them above the law.
I recognise that, as with, in John Masters' account, the half dozen Gurkha soldiers in World War Two who volunteered to jump out of aeroplanes even before it was explained to them that they would also be assisted by a parachute, the fact that there were volunteers for this sort of work a dozen years ago might make some say that the new clauses are otiose. However, the Irish experience indicates that anonymity and protection for officials and professional investigators in the bureau are conducive both to recruitment and to productive results. I beg to move.
Baroness Buscombe: I entirely support my noble friend Lord Brooke and defer completely to his experience.
Lord Rooker: I was almost about to say the same. I have never set foot on the island of Ireland, but it is

37
not so easy to carry out law enforcement activities on a small island with a single community as it is in a large country with millions of people. Therefore, the noble Lord's tribute to the bravery of the officers concerned is wholly justified. Although I cannot accept the amendments today, we shall accept the idea at another time. As Bob Ainsworth said in reply to the debate in the other place, we shall examine the matter further.
At present, anonymity is available only to police and to Customs officers and in very limited circumstances in relation to the investigation of terrorism. Civilian staff working for bodies such as the Crown Prosecution Service and the Serious Fraud Office have no statutory right to anonymity. However, we have given the matter further consideration. At a suitable point in the Bill—which I understand to be Part 12 the Government will bring forward an amendment dealing with the protection of the identity of members of staff of the agency. We shall have a full opportunity then to debate the issue.
It may be useful for future debate if I say that the amendment that we intend to table will empower the director of the agency, and only the director, to direct that members of agency staff may operate using pseudonyms in circumstances where they would otherwise need to identify themselves by name. That will, we believe, provide an important protection in appropriate cases. We shall discuss those in some detail when we reach that part of the Bill.
Viscount Bledisloe: As we shall be returning to this matter, perhaps I may make one point. Does not this provision go too far? The noble Lord, Lord Brooke, said that the identity of the anonymous person would be revealed to the judge. What happens if the judge himself thinks it necessary to reveal it for the purposes of the proceedings to other persons taking part in the proceedings? Strictly, under the Bill as drafted, the judge himself would be committing the offence under subsection (3) of the new clause proposed in Amendment No. 10. I do not believe that there is any exclusion for the judge causing the name to be revealed if he feels it necessary in the interests of justice.
Lord Rooker: The noble Viscount raises an important point. I do not know whether judges have that power when at the moment only limited anonymity is available. I hear what the noble Viscount says and we shall consider the issue with a view to debating it in greater detail. That point will have to be addressed in Part 12 of the Bill.
Lord Brooke of Sutton Mandeville: I am grateful to your Lordships who have taken part in this debate and I am extremely grateful to the Minister for his response. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 10 not moved]
Clause 6 [Making of order]:
Baroness Buscombemoved Amendment No. 11:
Page 3, line 17, at end insert "and the court considers that there is no real risk of injustice from it so proceeding"
38
The noble Baroness said: I shall also speak to Amendments Nos. 13, 15, 78, 97, 98, 144 and 146. I do not intend to speak to Amendments Nos. 87, 140 and 200.
The amendment address one of the most important issues of the Bill, which is judicial discretion and the power of the judiciary to intervene to ensure that justice is done, and seen to be done. There was considerable debate on this issue in another place and a good deal of concern was expressed in your Lordships' House at Second Reading. All the reasoning was laudable and reflected the criminal justice system as we know it and as we wish to protect it. In so doing, we wish to protect the freedom and rights of the individual against the undue and overbearing power of the state.
To put the matter in context, when I first read the Bill I was appalled at the prospect of the courts having no discretion to decide whether an investigation should proceed under Clause 3. We are then confronted with a further new element of criminal lifestyle, which is thrust upon us in Clause 6, wherein a judge can decide only as a matter of fact whether to confiscate a person's assets before the person has had the opportunity to show that such assets were obtained by innocent means.
Our Amendments Nos. 11, 13, 93, 97, 98 and 144 all contend that the court should have a discretion at the outset as to whether an investigation should take place at all. The matter was pressed in another place by my honourable friends the Members for Beaconsfield and for Surrey Heath. My honourable friend the Member for Beaconsfied, Mr Grieve, said:
"Under the Bill, action can be taken not only at the prosecutor's but at the director's discretion. In truth, it is being turned into a confiscatory administrative mechanism, wholly controlled by the director of the Assets Recovery Agency. That should be a source of concern to those who wish asset recovery to be an instrument of justice and not of oppression".—[Official Report, Commons Standing Committee B, 15/11/01; col. 61.]
Following discussions with the metropolitan police and the head of the serious crime group, we are now suggesting in Amendments Nos. 15, 78 and 146 what we believe to be a sensible, workable compromise. We appreciate that when a prosecutor asks for an investigation he or she is doing so at a stage when a judge or magistrate will not necessarily have the information that underlies the reason for that investigation.
Under Clause 6 the Crown Court can make a confiscation order if certain conditions are satisfied. For example, if a defendant is convicted of an offence in the Crown Court and the prosecutor asks the court to proceed under Clause 6, and if the court decides that the defendant has a criminal lifestyle and has benefited from his general criminal conduct, or if he has benefited from his particular criminal conduct although he does not have a criminal lifestyle, the court must—not may—make a confiscation order. The court has no discretion in the matter. Essentially the only discretion leading to a confiscation order is to be exercised by the prosecutor or the director of the assets recovery agency making the appropriate

39
decision to ask the court to proceed under Clause 6. If either of them do that the court must make the confiscation order once it has decided certain issues of fact.
The court must make that order however great the injustice. We think that it could be argued that the court should have discretion in the matter. It cannot be right that what little discretion there is under the clause can be exercised only by a prosecutor, who is hardly an impartial observer. We believe that a judge is the best qualified person. He has the appropriate knowledge, experience and impartiality to decide whether a confiscation order should be made.
Amendment No. 15 would give the judge a discretion not to make a confiscation order if he felt it inappropriate to do so. If the prosecutor or the director of the assets recovery agency does not like that decision, he or she can appeal. The noble and learned Lord the Attorney-General may say that our amendment is unnecessary because of Clause 11(6). Clause 11 refers to assumptions to be made in case of a criminal lifestyle and subsection (6) states that,
"the court must not make a required assumption in relation to particular property or expenditure if …there would be a serious risk of injustice if the assumption were made".
That is not sufficient. At this stage of the proceedings, the court must be given proper discretion on all the facts before it decides what is just. I beg to move.
4.45 p.m.
Lord Goodhart: This group of amendments includes three—Amendments Nos. 14, 95 and 145—in my name and that of my noble friend Lord Thomas of Gresford. I should say at the outset that our views are similar to those of the Conservatives, as expressed by the noble Baroness.
The Government are showing an alarming lack of trust in the courts, and perhaps an equally alarming confidence in the prosecutor or director to reach the right decisions. The Government are attempting to impose rigid rules. I have no great problem with the idea that if a defendant is convicted in the Crown Court, or committed there for sentence, the court must at least consider making a confiscation order if it is asked to do so by the director or the prosecution. However, that consideration opens up a two-stage process in cases when a criminal lifestyle is alleged.
The court has to decide whether the defendant has a criminal lifestyle, and if it finds that he does, under Clause 11, it has to investigate what benefit, if any, the defendant has obtained from that lifestyle and order the confiscation of the benefit. Criminal lifestyle is defined in Clause 75.
The court's decision at stage one of the inquiry—whether there is a criminal lifestyle—depends almost entirely on the defendant having been convicted of one or more offences included in the list, or three or more unlisted offences. In the great majority of cases, previous convictions will be formally proved and that will be that. But the formality of the requirement in
40
Clause 75 leaves the court with no effective discretion. We know that three minor shoplifting offences for which a defendant has been convicted over a period of six years would constitute a criminal lifestyle. So, too, as it appears from the reply of the noble and learned Lord the Attorney-General to a previous group of amendments, would a conspiracy for apparently any purpose that had continued for a period of six months, or more; for example, a conspiracy by members of an environmental group deliberately to cause some relatively minor form of criminal damage as part of a protest.
The court cannot say, technically, that the requirements of Clause 75 are satisfied if the defendant does not, in reality, have anything that could be called "a criminal lifestyle". The Government can, and do, say that in such a case the prosecutor would not ask for a confiscation order—probably not. But there will be cases, although perhaps not quite so obviously non-lifestyle as the ones that I mentioned, where an overzealous prosecutor might ask for a confiscation order on the basis of general criminal conduct where it was unreasonable to press for such an order.
The Government will then point out that there is a safety net in the courts' jurisdiction in Clause 11(6). The courts can refuse to make an assumption under Clause 11 if there would be a serious risk of injustice if an assumption were made. Indeed, I acknowledge that that is a matter of some help. However, it still means that the defendant will have to go through the process of providing information about his assets, identifying how they were paid for, and so on, which will be extremely onerous. Where the defendant's lifestyle is criminal in a purely technical sense only under Clause 75 and not so in reality, it would surely be much better for the court to have power to stop the case at stage 1 and not have to continue with the full investigation required by stage 2.
The Government are saying, "We can't trust the courts to exercise that discretion reasonably. Therefore we have to force everyone to sit through the lengthy hearing of an application, which should not have been brought to begin with". I accept that the fact that convictions are nominally trivial does not always mean that there is not a real criminal lifestyle, but in deciding what is just the prosecution could outline the case against a defendant—and would no doubt do so—and could allege that the conviction was only the tip of the iceberg and that, therefore, the confiscation order was justified.
In order to achieve a just result, we need a power for the court to bring the proceedings to an end at stage 1 when the court decides whether or not a criminal lifestyle is proven, if the court is satisfied that, in all the circumstances of the case, it would be unjust to allow the proceedings to continue on the basis that there was a criminal lifestyle.
Lord Thomas of Gresford: Perhaps I may ask a question in support of my noble friend. Why should this Bill give a discretion to the prosecutor but no discretion to the court? I repeat that question because I want to be sure that the noble and learned Lord the

41
Attorney-General has heard my question, which is very short. Why should the discretion as to whether or not to bring proceedings under the Bill rest with the prosecutor, not with the court? I quite fail to follow the rationale of that provision. Once the prosecutor says, "We will have an investigation", it is mandatory. Is it that the Government do not trust the judges, or what?
Lord Goldsmith: I apologise to the noble Lord for my momentary lapse of attention for technical reasons. The amendments now before the Committee resurrect quite a lengthy debate in another place. The amendments are different variants of the same point; namely, to remove the mandatory element, or elements, from the scheme.
I should like to make some general points before dealing with the specifics of the amendments. First, the use of a mandatory process is not new. Under existing drug trafficking confiscation legislation that applies to England and Wales, it is the position—and has been for a number of years—that there is a mandatory requirement for the assumptions to be made following conviction of a single drug trafficking offence. Indeed, having found that the existing legislation in 1988, which did not include mandatory assumptions, was not working, the previous Conservative government introduced mandatory assumptions into the later Bill. Therefore, although it is true that the mandatory element does not apply in all cases, either across the United Kingdom or in relation to all offences, it would be very strange to row back from the existing position in relation to whether such assumptions should be made mandatory.
Secondly, we need to remember why the legislation is necessary. As was largely agreed on Second Reading, it is necessary because the proceeds of crime are fuelling more crime: they are the working capital of drug traffickers, of people traffickers, and of organised crime. As the noble Lord, Lord Kingsland, put it pithily on Second Reading, they have a corrosive effect. I believe that we are all agreed that it is important for them to be reached. However, at present, only a very small proportion of the proceeds of crime are reached by existing legislation. As I said previously, less than £20 million was confiscated in 2000–01, whereas it is estimated that the added value of the drug trade alone is perhaps as much as £8.5 billion. That represents a very remarkable disparity between what we are able to achieve and the actual proceeds of crime. Therefore, the Government believe it to he crucial for the legislation to be both workable and effective.
I do not choose the words "workable" and "effective" accidentally; indeed, they are words used by the noble Baroness, Lady Buscombe, on Second Reading, when she said that it was the will and wish of her party,
"to assist the Government in producing a workable and effective piece of legislation".—[Official Report, 25/5/02; col. 19.]
The removal of the mandatory requirements—and, therefore, a major plank of the scheme—would, in our view, be the opposite of producing a workable and effective piece of legislation; indeed, as I said, it would
42
be rowing back on the existing position, even though that does not achieve as much as I believe all noble Lords desire.
Thirdly, I wish to emphasise the nature of the proceedings that will take place. To begin with, the prosecutor must ask. Noble Lords will be aware that prosecutors—certainly those in the Crown Prosecution Service and in the Serious Fraud Office—come under my jurisdiction. I am the Minister responsible for them. Noble Lords will also be aware that the prosecutors jealously guard their independence: they exercise an independent judgment in the prosecution decisions that they make. Therefore, the only zealousness that I recognise in relation to prosecutors is the exercise of an independent judgment; that is, a judgment in accordance with the facts, with the evidence, and with the law, as opposed to their being over-zealous in the way suggested by the noble Lord, Lord Thomas of Gresford.
As public authorities, it is unlikely in the extreme that prosecutors would consider it appropriate to spend the time or the resources on pursuing a confiscation in a case where that was plainly inappropriate. I regard the fact that the prosecutor must ask as an important, but entirely appropriate, safeguard in these procedures. But there is a further important safeguard. Where we are concerned with a case in which assumptions are to be made, then in two circumstances those assumptions will not be made; first, if the assumption is not made out, as in Clause 11(6)(a), because the assumption is inappropriate and the defendant demonstrates that it is inappropriate, and, secondly, as I mentioned earlier, where the court is of the view that there would be a serious risk of injustice if a particular assumption were to be made. Again, that is a fallback position. That is not to minimise what it is, but it is an important circumstance in which the court, if it thinks that there would be a serious risk of injustice, would be able not to make a particular assumption.
Short of that, what the legislation provides is that if the prosecutor asks for the order and the court finds—either in the particular case or by application of the assumptions—that the defendant has benefited from criminal conduct, then the court will have to make an order. The Government ask: what is wrong with that? If the defendant has benefited from criminal conduct, why should not the proceeds, up to the available amount and not beyond what the defendant actually has—we have debated that point—be forfeited? What is the justification for forfeiting less than that?
Those general points are applicable to all the amendments in this grouping. Perhaps I may refer briefly to the slight variations between the amendments which have been put forward. As the noble Baroness, Lady Buscombe, pointed out, Amendments Nos. 11, 93 and 144—the latter two referring to the respective Scotland and Northern Ireland variants—would put an additional requirement into Clause 6. I suggest that that would have the effect of abolishing the mandatory nature of the procedure. It would change confiscation from a certain disposal applied uniformly across the jurisdiction into something rather unreliable and

43
subjective. If I may respectfully say so, the lead amendment does not even suggest the criteria by which the court is to decide what is meant by a,
"real risk of injustice from … proceeding".
Of course we understand what would be meant if the court reached the stage of either making or not making an assumption because of the serious risk of injustice in making it. In effect, this would amount to a discretionary power which, for the reasons I have given, the Government would regard as seriously and dramatically undermining the benefits of the legislation.
Noble Lords may also consider that it is important for criminals to know that if they do benefit from criminal conduct, they will not be able to escape and will not be permitted to keep their benefit. If convicted of the relevant offences, then the confiscation procedure will follow. That is an important message.
Amendments Nos. 15, 97, 98 and 146 put the discretion at a different stage; that is, once the court has decided that the defendant has benefited from criminal conduct. The noble Baroness seeks to give the court a discretion, notwithstanding that, not to make an order. If the court has decided that the defendant has benefited from criminal conduct, then the Government ask why the defendant should not have to pass over such money—if the money is not there, that is a different matter—up to the available amount. Why, they ask, should he be allowed to keep it?
If it is a case of application of the assumptions, then a different safeguard is already available. It is that the court will not make the assumption if there is a serious risk of injustice.
I turn to Amendments Nos. 14 and their Scotland and Northern Ireland equivalents, Amendments Nos. 95 and 145, spoken to by the noble Lord, Lord Goodhart. The effect of those amendments would be to prevent the court deciding that the defendant had a criminal lifestyle and confiscating the benefit from his general criminal conduct if it considered that it would be unjust to do so. These are variations on the previous amendments which would make the holding of a confiscation hearing a matter for the discretion of the court.
While we understand that the amendments are not intended to remove the obligation of the court to confiscate a defendant's benefit from particular criminal conduct, they would give the court a discretion not to confiscate a defendant's benefit from his general criminal conduct. If we understand the amendments correctly, because they would not apply to the first case then they are somewhat less objectionable than the amendments proposed by the noble Baroness, Lady Buscombe, but for the reasons that I have already given, we still regard them as unacceptable.
Where the conduct of a defendant shows that he has been living a criminal lifestyle in the ways provided for in the legislation, then to be restricted simply to the
44
consequences of the particular offence of which a defendant has been convicted would he a very inadequate way of getting at the proceeds of crime.
5 p.m.
Lord Goodhart: Does the noble and learned Lord agree that the test of "criminal lifestyle" is so dependent on being convicted of certain particular offences that it could well arise even where, in reality, the defendant has not been living on the proceeds of crime?
Lord Goldsmith: If the facts are such, then either the defendant will demonstrate that the assumption that certain property has been acquired as a result of a criminal lifestyle is incorrect, or the court will form the view that there would be a serious risk of injustice in making that particular assumption. I suggest that those are the safeguards which are important and appropriate.
Finally I turn to Amendment No. 78, spoken to by the noble Baroness. It is similar to the previous amendments and would give the court discretion as to whether to find that a defendant had a criminal lifestyle and therefore to make the assumptions at all. That is absolutely diametrically opposed to the existing legislation, a statute brought forward by the noble Baroness's own party in the last administration. It would mean rowing back from the existing position and, in the Government's view, it would undermine the effectiveness of this legislation.
For those reasons, we cannot support the amendments. I hope that they will be withdrawn.
Lord Thomas of Gresford: Generally, when counsel makes an application to a judge in court, he does not know what the result of that application is going to be, however confident he may feel. What is envisaged under this legislation is that the prosecutor will say, "I have decided, in the exercise of my discretion and in exercising my independent judgment—that is, independent of the Attorney-General and anyone else—to make this application. You have no choice. You must enter upon the inquiry which I now require you to make". I find it constitutionally unacceptable for such a power to rest simply with the prosecutor. The judge will have no control over an application made to him in court.
The noble and learned Lord the Attorney-General surely was setting his case rather high when he said that giving a discretion to the judge to stop such an application on the threshold would amount to a serious and dramatic weakening of the legislation. I would be interested to know between now and Report stage whether any instance has come to the Attorney-General's notice where an application by a prosecutor has been refused on the threshold by a judge. If that is the case, what were the circumstances and the reasons given by the judge for exercising the current discretion that he has in cases other than drugs cases?
Viscount Bledisloe: I agree with much of the reply given by the noble and learned Lord. The amendments

45
are too wide. Apart from anything else, under Amendment No. 13 a judge would have to decide whether it was appropriate to proceed before he had investigated the matter.
None the less, there will be exceptional cases. The noble and learned Lord accepted my suggestion that blackmail may be exceptional. When asked by the prosecutor or the director for an order, could not the judge have the power to decide not to proceed in exceptional circumstances? Such an amendment has not been asked for but perhaps the noble and learned Lord will consider the matter.
The noble and learned Lord spoke about the prosecutor as though it would always be the Crown Prosecution Service which would ask for an order. It may be unlikely in relation to the offences to which we are referring but there is always the possibility of a private prosecution—and a private prosecutor may be singularly unreasonable in what he may ask for in relation to a victim. I do not ask for an answer now, but will the noble and learned Lord consider before the next stage whether it might be appropriate to give the court a residual discretion, limited to exceptional circumstances, to decide not to proceed even if the prosecutor or the director has asked it to do so?
Lord Goldsmith: I shall not answer now but we always consider carefully what noble Lords say.
Let me make two provisional comments. First, when I dealt with the blackmail example, I was pointing to the fact that the court has the ability to say that it is inappropriate to make the assumption because there would be a serious risk of injustice. We should not overlook that extremely important safeguard and the safeguard where the defendant shows that the assumption is incorrect.
Secondly, the Director of Public Prosecutions has the ability to take over proceedings started by a private prosecutor. So where a private prosecutor is thought to be abusing whatever power he may have—whether bringing a prosecution or taking a particular step in the process—there is always the remedy that the director (and therefore the Crown Prosecution Service) can step in and exercise his judgment in relation to the case.
Baroness Buscombe: I thank the noble and learned Lord the Attorney-General for his response. Perhaps I did not make it clear that, in speaking to Amendments Nos. 11 and 13, I was seeking to set a comparison between having the discretion right at the beginning or later. I agree with the noble Viscount, Lord Bledisloe, that it is too early—notwithstanding the debate that took place in another place—because the information that underlies a request for an investigation is not in front of the judge or magistrate, in which case it would make sense to see some discretion kick in at a later stage. That is the purpose behind Amendment No. 15.
I wondered how long it would be before the noble and learned Lord made reference to what I said at Second Reading, as I was sure he would. I stand by what I said then because we are not in any way
46
diminishing the ability of the legislation to be workable and effective by proposing Amendment No. 13. It will not remove a major plank of the scheme. It simply seeks to give discretion to the court to address the individual circumstances of the case. It would mitigate the potentially onerous and time-wasting impact of this provision.
The noble and learned Lord said that it would be unlikely in the extreme that the prosecutor would use this procedure unnecessarily, but surely that is not a good reason for removing any discretion. We are simply proposing the introduction into the legislation of an important, tested and tried safeguard. I have heard what the noble and learned Lord has said and I shall read it with care in Hansard. On that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.15 p.m.
Baroness Buscombemoved Amendment No. 12:
Page 3, line 17, at end insert "as having taken place after this Act comes into force"
The noble Baroness said: In moving Amendment No. 12, I shall not speak to Amendment No. 88, with which it is grouped.
Amendment No. 12 seeks to ensure that the Bill is not applied retrospectively. Throughout the Bill, the possession of the alleged proceeds of crime and an alleged criminal lifestyle derived from those proceeds is differentiated— hence the alleged criminal lifestyle may have taken place many years previously and yet proceedings in relation to current possession of alleged proceeds is deemed a current and not retrospective offence.
Retrospective legislation lacks clarity and raises issues of unfairness because of the time that has passed. The burden of proof is of a civil standard and in confiscation proceedings it shifts to the suspect. At the very least we consider 12 years to be too long a period given that the Inland Revenue requires documentation to be held for only six years. I beg to move.
Viscount Bledisloe: I am wholly opposed to the amendment. Quite apart from the fact that it is inelegantly worded, it is a misapplication of the presumption against retrospective legislation, which is that actions should not be criminalised or made illegal after they have been carried out. To say that a new procedure designed to get back the proceeds of what was always criminal is retrospective legislation and objectionable is entirely contrary to the principles against retrospectivity.
Lord Rooker: As a starting point, I hope that the noble Baroness will accept that recovery of the proceeds of crime can never be unjust. It does not matter when the crime was committed as long as there has been a conviction.
Our view is that confiscation orders made after the commencement of the Bill which deal with general criminal conduct should be able to recover the benefit

47
from conduct that took place at any time. The penalty attaches to the offence of which the defendant has been convicted rather than to the offence for which the benefit is being confiscated. This interpretation has been endorsed by the Court of Appeal and the Strasbourg Court in the case of Taylor.
Any other interpretation would make the legislation completely unworkable because lawyers—I almost said my learned friends—would be queuing up on behalf of defendants to argue whether the property in question derived from a crime and when the crime was committed. The split in the current legislation between drug trafficking and other crimes has caused difficulties because defendants have sought to argue that the property was derived from different types of crime and they somehow think, "Well, that is okay then. If it is one type of crime, that is okay".
As I said, the recovery of the proceeds of crime cannot be unjust. The amendment would provide a loophole which would be easy to exploit. Criminals would argue that the crime giving rise to the benefit was committed before the relevant cut-off date. I ask the noble Baroness to reconsider the matter. I am sure that having done so she will not press her amendment.
Baroness Buscombe: I thank the Minister for his firm response. I had been encouraged to propose the amendment by members of the legal profession, which perhaps explains his response that learned friends would be queuing up. I say no more than that. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 13 to 15 not moved.]
Lord Kingslandmoved Amendment No. 16:
Page 4, line 5, leave out "on a balance of probabilities" and insert "to the standard of proof applicable in civil proceedings"
The noble Lord said: The amendment is about the standard of proof applicable in civil proceedings, which is generally on a balance of probabilities. However, as I know many noble Lords will be aware, the degree of probability varies from case to case. When considering whether a defendant has been guilty of a criminal offence, a civil court will naturally want a higher degree of probability than it would require in, for example, an allegation of negligence. A civil court would not go so far as to apply the criminal standard of proof, but would look for a degree of probability commensurate with the issue. They usually apply a certain amount of common sense and flexibility in conducting that task.
Clause 6 provides that any questions arising under subsections (4) or (5) must be decided on a balance of probabilities. In my submission, that is an unacceptable constraint on a civil court. That court must be given flexibility. We believe that it is better to provide that decisions must be proved to the standard of proof applicable in civil proceedings rather than invariably on a balance of probability. I beg to move.
Lord Thomas of Gresford: I support the amendment. The expression "balance of probabilities" is well
48
known and well used, but it is slightly unsatisfactory, because it could mean, for example, that when there are two competing sets of facts that are almost equally improbable, the less improbable one will succeed. The civil courts seek to achieve an acceptable degree of probability, which is a slightly different concept.
In the context of this legislation, the decision as to whether a person enjoys a criminal lifestyle depends on whether he has been convicted of an offence set out in the schedule or had three convictions within a particular period or over a period of six months. The fundamental point is that there has already been a conviction of conduct beyond reasonable doubt to the criminal standard. The issue is, in subsection (4), whether the criminal has benefited by his criminal conduct and, in subsection (5), what is the recoverable amount, having regard to the extent to which he has benefited.
On that latter question of the recoverable amount depends the possibility of a lengthy term of imprisonment. In default of payment of a sum in excess of £1 million, for example, a person can be sentenced to serve 10 years' imprisonment. There is a reducing scale from there. Loss of liberty is certainly involved.
The civil standard of proof is well understood to require something more than a balance of probability if a person's liberty is involved. Perhaps it is best expressed in the words of Justice Dixon in an Australian case called Briginshaw. He said:
"The seriousness of an allegation made … the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of the kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency".
His point is that the more serious the effect on a person, the greater the degree of probability that is required. In this case, when the possibility of long terms of imprisonment can be imposed by way of default, it is essential that the civil standard of proof, as understood in the courts, should be applied, not merely the rather trite phrase "the balance of probabilities".
Lord Rooker: The amendments revisit a theme that has been used previously in the Bill. In its simplest terms, the Government's intention is that the standard of proof applied in confiscation proceedings should be the flexible civil standard. We believe that the fact that the Bill refers to the balance of probabilities does not make any difference in that respect. The Bill refers to the balance of probabilities rather than to the standard applicable in civil proceedings because we have received advice that in some civil proceedings, such as those for contempt, the applicable standard of proof is beyond reasonable doubt. We want to make it clear that that standard of proof—beyond reasonable

49
doubt—does not apply in confiscation proceedings. The use of the expression "the balance of probabilities" helps to achieve that end. Nor do we believe that the expression "the balance of probabilities" applies a lower standard of proof to confiscation proceedings than the civil standard. We are fortified in our view on this point by earlier case law, although—I am going to put myself in a pit here— I do not have one to quote. If need be, I shall get one. Briefly, the effect of the jurisprudence is that the references to the balance of probabilities import flexibility, but, at the same time, require a standard lower than the criminal standard of beyond reasonable doubt.
I hope that that explains our position. We want to be able to use the flexible civil standard, but we have received advice that in some proceedings, particularly contempt proceedings, that has been interpreted as beyond reasonable doubt, which would go much too far for confiscation proceedings.
Lord Kingsland: I thank the Minister for that extremely helpful reply. I look forward to hearing the noble Lord's statement read out many times in the High Court when this matter is addressed by counsel. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
5.30 p.m.
Baroness Buscombemoved Amendment No. 17:
After Clause 6, insert the following new clause—
"DISPOSAL OF FAMILY HOME: ENGLAND AND WALES
(1) This section applies where a confiscation order has been made in relation to any person and the prosecutor has not satisfied the court that the person's interest in his family home has been acquired as a benefit from his criminal conduct.
(2) Where this section applies, then, before the administrator disposes of any right or interest in the person's family home he shall—

(a) obtain the relevant consent; or

(b) where he is unable to do so, apply to the court for authority to carry out the disposal.

(3) On an application being made to it under subsection (2)(b), the court, after having regard to all the circumstances of the case including—

(a) the needs and financial resources of the spouse or former spouse of the person concerned;

(b) the needs and financial resources of any child of the family;

(c) the length of the period during which the family home has been used as a residence by any of the persons referred to in paragraph (a) or (b),

may refuse to grant the application or may postpone the granting of the application for such period (not exceeding twelve months) as it may consider reasonable in the circumstances or may grant the application subject to such conditions as it may prescribe.
(4) Subsection (3) shall apply—

(a) to art action for division and sale of the family home of the person concerned; or

(b) to an action for the purpose of obtaining vacant possession of that home,

50
brought by the administrator as it applies to an application under subsection (2)(b) and, for the purposes of this subsection, any reference in subsection (3) to the granting of the application shall be construed as a reference to the granting of decree in the action.
(5) In this section—
"family home", in relation to any person (in this subsection referred to as "the relevant person") means any property in which the relevant person has or had (whether alone or in common with any other person) a right or interest, being property which is occupied as a residence by the relevant person and his or her spouse or by the relevant person's spouse or former spouse (in any case with or without a child of the family) or by the relevant person with a child of the family;
"child of the family" includes any child or grandchild of either the relevant person, or his or her spouse or former spouse, and any person who has been treated by either the relevant person, or his or her spouse or former spouse, as if he or she were a child of the relevant person, spouse or former spouse, whatever the age of such a child, grandchild or person may be;
"relevant consent" means in relation to the disposal of any right or interest in a family home—

(a) in a case where the family home is occupied by the spouse or former spouse of the relevant person, the consent of the spouse or, as the case may be, of the former spouse, whether or not the family home is also occupied by the relevant person;

(b) where paragraph (a) does not apply, in a case where the family home is occupied by the relevant person with a child of the family, the consent of the relevant person."

The noble Baroness said: In moving Amendment No. 17, I shall speak also to Amendment No. 148, a related amendment applying to Northern Ireland.
Clause 101 gives certain limited rights to the spouse or former spouse of a person in relation to whom a confiscation order has been made and to children of the family. It applies where the family home has not been acquired as a benefit from criminal conduct. If that is the case, it will be necessary before the disposal of a family home to obtain the consent of the occupying spouse or the authority of the court.
On an application for such authority, the court must have regard to all the circumstances of the case including the needs and financial resources of the spouse or former spouse and the needs and financial resources of any child of the family. The court then decides whether to give its full authority. However, it can postpone any disposal for such period not exceeding 12 months as it may consider reasonable in the circumstances. It can also grant such authority subject to such conditions as it may prescribe. That gives some protection to a spouse, former spouse or children of the family.
The curiosity of Clause 101 is that it applies only in Scotland. In England, Wales and Northern Ireland—however great the need of a spouse, former spouse or the children of the family, and however pressing the circumstances of the case—the court will never have an opportunity to postpone giving authority for even a couple of months. In England, Wales and Northern Ireland, there is no necessity to obtain the relevant consent or to ask the court for authority to carry out the disposal.

51
Although I appreciate that there are interesting historical reasons for spouses and children being treated better in Scotland, historical reasons cannot justify what would otherwise be an injustice. Surely, it cannot be right that spouses and children are treated better in Scotland than they are in England, Wales and Northern Ireland. All must be treated the same. Today, regardless of history, we must ensure that that happens. The proposed new clauses will give spouses, former spouses and the children of the family exactly the same rights in England, Wales and Northern Ireland as they will have in Scotland.
There is one drafting point. References in Amendment No. 17 to "the administrator" should be read as "the receiver" to reflect the fact that we are talking about confiscation proceedings in England and Wales. I beg to move.
Lord Goodhart: I support this pair of amendments. As I understand it, their effect would be to shift the burden of proof in relation to the family home in England, Wales and Northern Ireland. Whereas the Bill currently provides that it is in general for the defendant to prove that property has been acquired innocently, in Scotland Clause 101 puts the burden of proof on the prosecution to show that the family home has been acquired as a benefit from criminal conduct. If that is satisfied, it is clear that Clause 101 will have no application, as Clause 101(1) states that,
"This section applies where a confiscation order has been made … and the prosecutor has not satisfied the court that the person's interest in his family home has been acquired as a benefit from his criminal conduct".
Clearly, therefore, even in Scotland, if the home is the proceeds of crime, there will be no power to defer the operation of the Bill.
We say in other amendments which have not yet been considered that the burden of proof on the defendant should be an evidential and not an absolute one, so that if credible evidence of innocent acquisition is produced by the defendant, it will be for the prosecution to prove that the acquisition has been made from the profits of crime. If those amendments are accepted, Clause 101 will not be needed.
Assuming that these amendments are not successful, Clause 101 seems wholly and entirely reasonable, not only in Scotland but across the entire United Kingdom. We believe that it should be extended to the rest of the United Kingdom. It has a very limited operation. First, as has been said, it will not apply if it has been established that the home comes from the proceeds of crime. Secondly, Clause 101 does not prevent the court ordering a sale. If there is a house with eight bedrooms, a swimming pool, a large garden and a garage for five cars, the court would be unlikely to refuse an order for sale. However, if the prosecution cannot establish on the balance of probabilities that the house represents the proceeds of crime, we firmly believe that the court should have a discretion to defer the sale for a limited time to enable the other members of the defendant's family to avoid all the deeply
52
unpleasant consequences that could result from immediate ejection from the house in which they are living.
Lord Rooker: Although there may seem to be a contradiction, I do not think that the differences are as great as they may at first sight appear. I hope that Members of the Committee can agree a settled position during our consideration of the Bill.
The amendments concern the exercise by the courts and the receivers of the power to realise property in satisfaction of a confiscation order. The English and Northern Irish legislation, both currently and in the Bill, require the defendant's interest in his or her home to be realised if that is necessary to satisfy a confiscation order. The legislation applies whether the interest has been legally or illegally obtained, in accordance with the general principle that a confiscation order, like a fine, is enforceable against any property. I should make it clear that we are talking only about the defendant's interest in the home. If the defendant's spouse has a beneficial interest in the home—for example, from helping to pay the mortgage with his or her earnings—the court must allow the third-party spouse to retain it.
Conversely, Part 3 of the Bill reflects a longstanding provision in the Scottish confiscation legislation that gives the Scottish court the power ultimately to refuse the realisation of the defendant's interest in his home in satisfaction of a confiscation order. As I think has been clearly identified, the power applies only to a legally acquired interest of the defendant, and is exercisable only where the court is satisfied that the defendant's spouse or another specified relative has asserted a claim to occupancy. So the position is not as black and white as it may seem.
As was pointed out in another place, the provision on the family home in Part 3 replicates earlier Scottish confiscation legislation in the Proceeds of Crime (Scotland) Act 1995. The 1995 Act developed briefer provision along the same lines in the Criminal Justice (Scotland) Act 1987. Therefore, as noble Lords can see, the difference has been around for about 15 years. The confiscation legislation in the three jurisdictions is different because Scottish law adopts a different approach to the occupancy rights of spouses in general.
The Matrimonial Homes (Family Protection) (Scotland) Act 1981 gives a right to occupy the matrimonial home to spouses who are not owners or tenants and provides for the protection of their occupancy rights, regardless of whether they have any beneficial interest in the home. These are referred to as non-entitled spouses, and they are protected by sections 6 to 9 of the 1981 Act from dealings by the entitled spouse. What that means is that protection is given against dealings which might include giving up the tenancy or selling the home. There is no directly equivalent legislation in England and Wales or Northern Ireland.
As we have already made clear, there are arguments in favour of both the position in Parts 2 and 4 of the Bill, and that in Part 3. One argument maintains that

53
the proceeds of crime should never be capable of retention and that a confiscation order should be enforceable against any realisable property. On the other hand, there is the argument that family circumstances may be so particular on occasion that the retention of the lawfully obtained value of the proceeds of crime may be justified.
The difficulty here, I freely admit, is that there is an argument both ways. There is no doubt about that. There is an element of principle in both approaches. We intend, therefore, to leave Parts 2, 3 and 4 as they stand but we shall monitor the operation. That is crucial. This is a fundamental change in legislation in terms of ensuring that people do not retain the proceeds of crime. We shall monitor those parts closely for any consequences flowing from the decision to retain the differences in the legislation.
To show that an element of principle is involved in both approaches, I should add that we have examined all three parts from the point of view of the European Convention on Human Rights. We are satisfied that the approaches are consistent with that convention. While Article 8 of the convention protects a person's home, that right must be balanced by virtue of paragraph 2 of Article 8 against other factors; in this instance the public interest in ensuring that criminals do not retain the benefits from their crimes. Nor do we see an arguable case under Article 14 of the convention over that issue.
I freely admit that the issue will probably be around until the Bill becomes an Act. However, I hope that I have made clear why we are unable to accept the amendments. We accept that there are different approaches. I hope I have given an explanation of the reasons for them. However, as I said, once the Bill reaches the statute book and is in operation, we shall monitor closely the consequences.
Baroness Buscombe: I thank the Minister for his full response. The matter was debated at some length in another place. However, we consider it to be of such importance that it should be revisited here and we should continue to look at it. As the Minister said, there is no directly-equivalent legislation in England and Wales to that set out for Scotland. Our response is that that is no argument for inconsistency.
We shall not detain the Committee. We shall read with care the Minister's response and, on that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.45 p.m.
Clause 7 [Time for making order]:
On Question, Whether Clause 7 shall stand part of the Bill?
Lord Rooker: As the Committee is aware, I oppose the Question that Clause 7 shall stand part of the Bill. In doing so, I speak also to the other government amendments in this group. The decision bears on the subject of postponement. It will be convenient to
54
consider with that a number of related government and opposition amendments. Perhaps I may provide the Committee with a brief exposition of the reasons for the deletion of Clause 7 and for tabling the related amendments, and then turn to the opposition amendments.
Clause 7 states that a confiscation order must be made before sentence. However, that is subject to Clause 16, which makes clear that if confiscation proceedings are postponed under Clause 15, a confiscation order may be made after sentence. It was objected to in the other place that Clause 7 should refer forward to Clause 16 to make that clear. In considering the issue, we have consulted the prosecuting authorities. We understand that nowadays confiscation proceedings are generally postponed, so sentence will often be passed before a confiscation order is made.
It seems to us that the very stark terms of Clause 7 imply that a confiscation order should normally be made before sentence and that confiscation proceedings will be postponed only exceptionally. However, that is not what happens at present. With the wider use of confiscation orders which we hope to achieve as a result of the Bill, no doubt they will be made in future in many more straightforward cases than at present. Where a confiscation order is straightforward it is more likely to be made before sentence without the need for the proceedings to be postponed. Perhaps at some future date it might even be the norm for confiscation orders to be made before sentence.
We would prefer the Bill to leave the matter open. We think that it would be better to avoid any implication either way. We would expect a confiscation order to be made before or after sentence, whichever is more appropriate in the particular case. The amendments, together with the deletion of Clause 7, achieve that end. The amendments are designed to improve the practical operation of the Bill and deal with an issue raised in the other place.
Without seeking to pre-empt any speeches on opposition amendments, perhaps I may comment on them, starting with Amendment No. 29. The effect of the amendment would be to reduce the normal maximum period of postponement from two years to six months. However, an amendment on similar lines was tabled and not pressed to a Division in another place. In that instance it was proposed to reduce the maximum period from two years to either six months or, indeed, three months. I refer the Committee to Hansard of 22nd November 2001.
As we pointed out on that occasion, the current arrangements for the postponement of confiscation hearings in the Criminal Justice Act 1988 and the Drug Trafficking Act 1994, which provide for a maximum period of six months, were carefully examined in the report of the Performance and Innovation Unit. The defects of the current arrangements are discussed in some detail in that report.
Paragraph 8.22 of the report concluded that the short six-month deadline meant that some confiscation orders could not be obtained due to

55
simple administrative delay occasioned, for example, by lack of court time or the unavailability of the trial judge. We agree with the conclusions expressed in the report that six months is far too short a period. A longer period may routinely be needed for all sorts of reasons. For example, the requirement to obtain evidence from abroad can lead to a delay of several months. Nor would we want defendants to be able to frustrate the purposes of confiscation by stalling in the hope that the six months will expire. That is another important point which is brought out in the PIU report. Therefore, the Government will not support the amendment.
Perhaps I may briefly refer to opposition Amendments Nos. 30, 111 and 155. The basic effect of the amendments would be to require the court to sentence the defendant within three months if it postponed the confiscation proceedings. Bearing in mind the amount of discussion on the court's discretion during the passage of the Bill, it seems odd that the amendment seeks to fetter that discretion. We see no particular reason why the court should be bound by that fixed time limit. For example, it might be ready to make a confiscation order just after the end of the three-month period only to have to hold a hearing to sentence the defendant and then return a week or two later for the confiscation matters. We believe that the court is the best arbiter of the matter. I hope that, while speaking to their amendments, noble Lords will not press them.
Baroness Buscombe: I accept the Minister's comments in respect of Amendment No. 29, wherein we proposed allowing proceedings for a confiscation order under Clause 6 to be postponed for only six months after the date of the defendant's conviction rather than two years as currently set out in the Bill. I accept the Minister's comments. On that basis, I shall not pursue the amendment.
I do not understand why our discussion is not grouped with Clause 162 stand part, which seems to be a mirror of Clause 7 but which relates to Northern Ireland. I put the suggestion to the Minister that it might save time later if it were dealt with now if he accepts that it covers the same point.
Lord Rooker: I am all for saving time. The groupings are offered to me as a humble Minister. We try our best to have groups which are as large as possible so that we can have structured debates. If there is a way in which another group can be merged with this one, that is fine by me. However, I shall need to take advice.
Lord Goodhart: I shall speak to Amendments Nos. 30, 111 and 155. Amendment No. 111 relates to Scotland and Amendment No. 155 relates to Northern Ireland.
It is important that a convicted defendant should be sentenced within a reasonably short time of that conviction. When I first saw that under Clause 7 sentence would be deferred until after the confiscation order had been decided on I was seriously worried by
56
its effect. The removal of Clause 7 has to some extent, although not entirely, removed my concerns about the matter.
I quite understand that confiscation orders may take a long time to investigate, and indeed in many cases probably will take a matter of several months. It is entirely inappropriate that a criminal sentence should be overhanging the defendant for the whole of that period. My amendment may be a little rigid and would be improved by giving the court the discretion to decide whether or not to apply it. However, it seems to me that the principle behind the amendment is correct. In normal criminal proceedings a sentence is imposed immediately on conviction, although in a good many cases it may be deferred for a relatively short period of time in order to obtain social and/or psychiatric reports or other information which the judge needs before sentencing.
It is desirable that the Bill should reflect the principle that there should be a reasonably short time within which sentence should be imposed. That is trebly important in cases where a defendant has been remanded in custody and is therefore sitting in prison, having been convicted, not knowing how long his sentence will be. Therefore, we may want to come back to the matter, perhaps in a modified form, at a later stage of these proceedings.
Lord Rooker: As I said when I made my initial remarks, I in no way want to pre-empt Members of the Committee in making their speeches. It is always difficult when speaking to a government proposal that is grouped with opposition amendments to avoid making the same speech twice. I repeat what I said. I take on board the point made by the noble Lord, Lord Goodhart. We do not see any reason why the court should be bound to a fixed time limit. Basically, I think that we should leave the matter to the courts.
With regard to the point made by the noble Baroness, I am quite happy to have the debate on Clause 162 stand part as part of this grouping if there nothing more to say about it. I am not exactly clear how that would be done from a procedural point of view. But if it were for the convenience of the Committee and everyone agreed that the Clause 162 stand part debate should form part of this grouping I should be happy for that to happen.
Baroness Buscombe: I thank the Minister. We would be entirely happy as the debate on Clause 162 stand part mirrors the debate on Clause 7 stand part.
Clause 7 negatived.
Clause 8 [Recoverable amount]:
Lord Kingslandmoved Amendment No. 18:
Page 4, line 16, at end insert—
"( ) But the defendant shall not be held to have benefited to the extent that such benefit has already been forfeited by reason of any other power or enactment."
The noble Lord said: I rise to move Amendment No. 18. Under Clause 6 of the Bill, the Crown Court must, if certain conditions are satisfied, make a

57
confiscation order for what is called the "recoverable amount". Clause 8 provides that the recoverable amount for the purposes of Clause 6,
"is an amount equal to the defendant's benefit from the conduct concerned".
Moreover, subsection (4) of Clause 8 provides:
"In calculating the defendant's benefit from the conduct concerned … any property in respect of which—

(a) a recovery order is in force under section 270, or

(b) a forfeiture order is in force under section 300(2), must be ignored".

Under Clause 9(3) it is provided that the court must deduct from the recoverable amount any,
"amount ordered to be paid under each confiscation order previously made against the defendant",
and any amount,
"ordered to be paid under each confiscation order previously made against him under any of the provisions listed in subsection (4) [of Clause 91".
However, I believe that there may be powers in other enactments which could result in confiscation. It may well he that subsequent enactments will give the court powers to make similar orders with regard to criminal offences.
We believe that the Bill can be improved by making it clear that, when calculating the amount equal to the defendant's benefit from the conduct concerned, one must deduct any benefit otherwise forfeited by reason of any other power or enactment. That will make clear what we believe to be the real intention of the Bill, which is to take everything into account. I beg to move.
Lord Rooker: The effect of these amendments would be to require the court to investigate whether any benefit belonging to the defendant had previously been recovered by means of any other power or enactment.
I point out that the Bill already recognises the principle that double counting should not apply. Clause 8(4) for example, requires the court to disregard property subject to a recovery or forfeiture order under Part 5 of the Bill. Additionally, where a confiscation order is made in respect of general criminal conduct, Clause 9(3) requires the court to deduct from the current confiscation order the amount ordered to be paid under any previous confiscation order.
The difficulty with the amendments is that they cast the net beyond previous confiscation orders to any power which may have had the incidental effect of recovering proceeds. The most obvious example of such a power is the power to fine. Another example is Section 27 of the Misuse of Drugs Act 1971, which enables the courts to make forfeiture orders in relation to drugs convictions.
However, there is no formal mechanism in these provisions for calculating the amount of the proceeds recovered. The only legislation dedicated solely and expressly to the recovery of criminal proceeds is currently the confiscation legislation.
Therefore, we currently deal with these types of orders in Clauses 14(2), 100(2) and 170(2), which state that the court must take the confiscation order into
58
account before it imposes such orders on a defendant. If the court postpones making a confiscation order until after sentence it cannot make any of these types of orders until the confiscation order has been calculated. That gives the court the flexibility to take account of what has and what has not been included in the confiscation order.
It is true that Clause 14 will have effect only where property is forfeited into the same proceedings as the confiscation order is made. It does not have effect in cases such as Cadman Smith where the criminal is deprived of assets before the case comes to court. However, where Clause 14 does not apply, we think that it is right to continue to recover the pecuniary advantage as well as forfeiting the goods. It may be helpful to quote what the noble and learned Lord. Lord Rodger, said on the point. He said:
"If, then, the value of property obtained as a result of or in connection with the commission of an offence is simply the value of the property to the offender when he obtained it, even if it is subsequently destroyed, damaged or forfeited, one would expect the same general approach to apply in the case of a pecuniary advantage".
For example, if an offender steals a television and subsequently drops and breaks it while carrying it to his home, he would still be liable to have the value of the television confiscated from him even though he could not sell the television in order to make any money. There is no reason why a pecuniary advantage that has been lost should be treated any differently. The point is that recovering the proceeds of crime is supposed to have a deterrent as well as a restitutory effect. It must be a laudable aim to try to stop it being worth criminals' while avoiding excise duty.
From what I have said, it will be clear that the amendments would force the courts to adopt an over-rigid approach in relation to such orders. It is far better for the courts to have the flexibility given to them under the Bill as drafted. For example, the amendments would require the court making a confiscation order to consider the confiscatory effect of previous fines and other measures not designed for confiscatory purposes. That would make matters extremely difficult because the court imposing such a measure may not give a formal indication of precisely how much of the fine is imposed with recovery in mind and what is intended to be penal.
The amendments would therefore tend to undermine the precise calculations which are central to the concept of confiscation. For that reason, we cannot accept them. I hope that the noble Lord will find my explanation helpful and reasonable and will be willing to withdraw the amendment.
Lord Kingsland: I am inclined to press the Minister further. He adumbrated the principle that there should be no double counting—that if any previous forfeiture or confiscation in relation to ill-gotten gains has led to the payment of funds or in kind by the offender, that should count against what is designated in the Bill as the proceeds of crime. Would it not be more

59
appropriate to have a general clause to that effect, leaving it to the court to apply that general clause to the specific circumstances of the culprit?
Lord Rooker: I do not think so, for the reasons that I gave. That would go much too far. There must be precision about the confiscation of proceeds of crime. As I made clear, we do not want double counting. I also want to make clear that we shall make appropriate provision in any subsequent enactments to prevent double counting under the Bill.
It is far better that the courts are given flexibility under the Bill. As I said, the amendments would require the court making a confiscation order to consider the confiscatory effect of previous fines and other measures not designed for confiscatory purposes. That would make matters difficult, because, as I said, the court imposing such a measure may not indicate precisely how much of a fine was imposed with recovery in mind and what was intended to be penal—we would not know.
As I said, the amendments would therefore undermine the precision of the calculation, which is crucial to get across the message to the criminal fraternity.
Lord Kingsland: I am most grateful to the Minister for his reply. He has fairly said that he is not inclined to accept our preferred position. In those circumstances, I should like to test the opinion of the Committee.
6.4 p.m.
On Question, Whether the said amendment (No. 18) shall be agreed to?
Their Lordships divided: Contents, 64; Not-Contents, 108.

Division No. 1

CONTENTS

Anelay of St Johns, B.

Geddes,L.

Astor of Hever, L.

Glentoran, L.

Boardman, L.

Goschen, V.

Brooke of Sutton Mandeville, L.

Henley, L.

Brookeborough, V.

Higgins, L.

Brougham and Vaux, L.

Holderness, L.

Burnham, L.

Howe of Aberavon, L.

Buscombe, B.

Howell of Guildford, L.

Byford, B.

Hylton, L.

Caithness, E.

Jenkin of Roding, L.

Campbell of Alloway, L.

Jopling, L.

Campbell of Croy,L.

King of Bridgwater, L.

CarnegyofLour, B.

Kingsland, L.

Cavendish of Furness, L.

Laird, L.

Chadlington, L.

Liverpool, E.

Colwyn, L.

Lucas, L.

Cope of Berkeley, L. [Teller]

Lyell, L.

Craigavon, V.

MacGregor of Pulham Market, L.

Dean of Harptree, L.

Elton, L.

Marlesford, L.

Erroll,E.

Monro of Langholm, L.

Feldman, L.

Montrose, D.

Ferrers, E.

Newton of Braintree, L.

Flather,B.

Northesk,E.

60

O'Cathain, B.

Saltoun of Abernethy, Ly.

Palmer, L.

Seccombe, B. [Teller]

Pearson of Rannoch, L.

Strathclyde, L.

Perry of Southwark, B.

Taylor of Warwick, L.

Pilkington of Oxenford, L.

Tebbit, L.

Vivian, L.

Rees-Mogg, L.

Wade of Chorlton, L.

Renton, L.

Warnock, B.

Rotherwick, L.

Wilcox, B.

NOT-CONTENTS

Acton, L.

Hughes of Woodside, L.

Ahmed, L.

Hunt of Chesterton, L.

Allenby of Megjddo, V.

Hunt of Kings Heath, L.

Alli,L.

Irvine of Lairg, L. (Lord Chancellor)

Alton of Liverpool, L.

Amos, B.

Jay of Paddington, B.

Andrews, B.

Jenkins of Putney, L.

Archer of Sandwell, L.

Jones, L.

Ashton of Upholland, B.

Layard, L.

Bach,L.

Lea of Crondall, L.

Barnett,L.

Lipsey, L.

Bassam of Brighton, L.

Lofthouseof Pontefract, L.

Berkeley, L.

McCarthy, L.

Bernstein of Craigweil, L.

Macdonald of Tradeston, L.

Blackstone, B.

Mclntosh of Haringey, L. [Teller]

Blease,L.

Boothroyd, B.

Mclntosh of Hudnall, B.

Brennan, L.

MacKenzie of Culkein, L.

Brett, L.

Mackenzie of Framwellgate, L

Brooke of Alverthorpe, L.

Masham of Ilton, B.

Campbell-Savours, L.

Mason of Barnsley, L.

Carter, L. [Teller]

Massey of Darwen, B.

Chan,L.

Milner of Leeds, L.

Cohen of Pimlico, B.

Mitchell, L.

Corbett of Castle Vale, L.

Nicol, B.

Craig of Radley, L.

Patel, L.

Crawley, B.

Patel of Blackburn, L.

Darcy de Knayth, B.

Pendry, L.

David, B.

Pitkeathley, B.

Davies of Coity, L.

Plant of Highfield, L.

Davies of Oldham, L.

Ponsonby of Shulbrede, L.

Desai, L.

Prys-Davies, L.

Dixon, L.

Puttnam, L.

Dormand of Easington, L.

Ramsay of Cartvale, B.

Dubs,L.

Randall of St. Budeaux, L.

Elder, L.

Rea, L.

Evans of Parkside, L.

Rendell of Babergh, B.

Farrington of Ribbleton, B.

Renwick of Clifton, L.

Faulkner of Worcester, L.

Rooker, L.

Filkin, L.

Sawyer, L.

Gale, B.

Scotland of Astha, B.

Gibson of Market Rasen, B.

Sheldon, L.

Gladwin of Clee, L.

Simon, V.

Golding, B.

Symons of Vernham Dean, B.

Goldsmith, L.

Taylor of Blackburn, L.

Gordon of Strathblane, L.

Turnberg, L.

Gould of Potternewton, B.

Turner of Camden, B.

Grocott, L.

Walker of Doncaster, L.

Hardy of Wath, L.

Weatherill, L.

Harrison, L.

Wedderburn of Charlton, L.

Hilton of Eggardon, B.

Whitaker, B.

Hogg of Cumbernauld, L.

Whitty, L.

Hollis of Heigham, B.

Wilkins, B.

Howells of St. Davids, B.

Williamson of Horton, L.

Hoyle, L.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.15 p.m.
Clause 8 agreed to.
Clauses 9 and 10 agreed to.
Lord Goodhartmoved Amendment No. 19:
After Clause 10, insert the following new clause—
"COMPENSATION OF CREDITORS
(1) Any person who was a creditor of the defendant at the time when the confiscation order was made may, within one year of the date of the order, make an application to the court for compensation.
(2) The court may require the enforcement authority to pay compensation to the applicant if it is satisfied that—

(a) as a result of the making of the order the defendant is wholly or in part unable to repay the debt;

(b) the debt was incurred for full consideration; and

(c) at the time the debt was incurred the applicant had no reason to believe that a confiscation order could be made against the defendant."

The noble Lord said: The amendment raises an important issue of principle; namely, the question of priority as between the state and the creditors of a defendant.
On these Benches, we agree fully with the principle that a criminal should he deprived of the proceeds of his crime. However, we also believe that the state has no legal claim to those assets that is equal to that of a creditor who has acted in good faith. If the state deprives a defendant of the money to pay his debts and does not compensate a bona fide creditor, the creditor—not the defendant—will suffer the loss.
It is obvious that we cannot leave a criminal with enough money to pay off his debts. In such a situation, the criminal will pay not them and will choose to use his money for something else. That explains why the identification of the "available amount" in Clause 10 does not include unsecured debts, unless they are preferential debts within the meaning of the bankruptcy legislation. However, it is not clear whether the available amount includes securities. Would a confiscation order override the security of a secured creditor? My initial impression was that it would not, but, having read through the Bill, I am not sure that that is the case. If a confiscation order did override secured debts, there would be serious problems with banks and building societies.
Let us assume that the confiscation order overrides only unsecured debts and that a criminal has entered into a contract with a builder for ordinary work—of some value—to be done to his house. It is a bona fide contract, and the builder does not know that the defendant is a criminal and has no reason to be aware of the risk that a confiscation order will be made. If, after the work is done—on credit terms, as usual—the criminal goes to prison and his assets, including his house, are confiscated, the builder will get nothing.
Assuming that a secured debt will not be overridden, we can see that, if the criminal has borrowed money on a mortgage from a building society or a bank to help him buy the home, the building society or bank will get its money back because it has security. However, on any interpretation of the Bill, the builder will not. Why should not the state, having confiscated the assets out of which the builder would have been paid, be obliged to pay him off? If it does not do that, it is punishing an innocent third party.
62
A bona fide creditor has a higher moral right to the money than the state. It can be said that the state has a duty, in the public interest, to deprive criminals of the benefits of their crime. However, that duty is not infringed by using confiscated money to pay off a bona fide creditor. Of course, accept that it is possible to manufacture artificial debts by, for instance, creating fictitious loans to the defendant. So safeguards are needed to ensure that the only debts that are repaid are those that are made in good faith.
Amendment No. 19 proposes that there should be three conditions for payment of debts out of confiscated money. Those three conditions are, first, that as a result of the confiscation order having been made, the defendant has become unable to pay the unsecured debt. If the confiscation order still leaves the defendant with enough assets to pay his unsecured debts, then that is where the creditor should look for them.
The second condition is that the debt should be paid for full consideration. The third consideration is that the court must be satisfied that the creditor did not have any reason to believe that the defendant was a person against whom a confiscation order might be made and that he had no reason to believe that such an order was likely to be made.
If those conditions are not met—in many cases they will not be easy to meet—the court should require payment of compensation out of the confiscated funds. Amendment No. 63 extends that by allowing debts to be paid out of property if, before it is subject to a confiscation order, it is subject to a restraint order. The remaining amendments apply the same rules in relation to Scotland and Northern Ireland. I beg to move.
Lord Rooker: I understand that the issues raised in these amendments revisit an issue raised in the other place but in a different form. However, I cannot accept the principle behind the new clauses or the amendments. In practical terms their effect would be disastrous on the operation of the legislation.
The Bill recognises the rights of secured creditors to recover their security. A typical example would be where a person has an outstanding mortgage. It would be open to the mortgage company to apply for a variation or discharge of a restraint order under Clause 43(3) in order to recover the debt. There is also provision for such interest to be taken into account if a receiver is appointed at the realisation stage of a confiscation order.
Secured creditors are also protected under the legislation by the legislative steer in Clause 69(3)(a), which states that,
"the powers must be exercised with a view to allowing a person other than the defendant or a recipient of a tainted gift to retain or recover the value of any interest held by him".
The Bill also recognises the prior claims of preferential debts as defined in the insolvency legislation by giving them priority over a confiscation in Clause 10.

63
The only issue before us therefore is whether unsecured creditors should take priority over the settlement of the confiscation order. We do not believe they should. The new clauses provide that they should take priority. It is true that the unsecured lender will be exposed to a wide range of risks; the fact that the borrower may be subject to a confiscation order is only one of them. We are not inventing the risk in that respect. The borrower or recipient of goods or services may turn out to be insolvent, may die without leaving adequate funds in the estate, or may simply default.
The new clauses also overlook the consequences for other obligations to the Crown. For example, are members of the public who owe debts to be absolved thereby from the obligation to pay their taxes? There is an extension for which people would push. Are the courts to be able to require the state to pay the debts of criminals against whom fines, compensation orders, costs and other disposals have been levied? It is preposterous.
The amendment also overlooks the fact that the making of a confiscation order does not absolve the defendant of the obligation to pay his debts. There is no wipe-out of the defendant's debts just because there is a confiscation order. The debts remain payable. Even if the confiscation order takes priority, the defendant has to pay the debts after the confiscation order has been satisfied. In any case, the confiscation order may not consume all the defendant's property. No one has implied during any of our discussions today that that would necessarily be the case.
Lord Goodhart: I entirely understand that. That is why one of the conditions on which our amendment proposes payment should be dependent is that the inability to pay by the defendant derives from the confiscation order having been made. So if the defendant has other assets out of which to pay this order, then no order is made for payment out of the confiscated money.
Lord Rooker: I accept that. But that does not hold up, simply because, taken as a package, the clauses and amendments would have an adverse practical effect on the operation of the effective confiscation system. In a way the noble Lord, Lord Goodhart, touched on one aspect of that in his opening speech.
We would be setting up a system that invites claims from bogus creditors who in reality were associates of the defendant. A whole new industry would start up. It would be difficult to prevent and would greatly weaken the confiscation system. What is worse, it would make the legislation inoperable from the enforcement authorities' point of view. The enforcement authorities would undoubtedly be discouraged from pursuing confiscations with the threat of claims from unsecured creditors hanging over them.
64
The end result of the amendments would be to encourage defendants to defeat the confiscation process by running up legitimate debts, safe in the knowledge that the authorities would be left out of pocket at the end of any confiscation.
Of course, other assets are not taken into account in the amendments. That factor must also be noted. The amendments to Clauses 42, 123 and 196 would have a similar effect even before a confiscation was made, for reasons similar to those I have given. A restraint order currently prevents the defendant from paying his debts. That is how it should remain. For those reasons I hope that the proposed amendments will not be pursued. They are wrong in principle and in practice for the reasons I set out.
Viscount Goschen: Before the noble Lord, Lord Goodhart, responds to the Minister, does the Minister agree that this amendment highlights a potential situation where, notwithstanding the points made by the Minister in terms of bogus creditors and so forth, which the noble Lord sought to address within his amendment, the action of the state, in imposing a confiscation order, could force companies into bankruptcy because the party with whom they contracted was the subject of a major confiscation order which substantially changed their financial circumstances? Does the Minister feel, therefore, that it would be a just situation if, as a result of a confiscation order, a company which had contracted with the guilty party in good faith was forced into bankruptcy?
Lord Rooker: I would not want anyone to be forced into bankruptcy. But it is the way of the world. People are dealing with companies day in and day out. The fact is that the underlying principle of this legislation is to reduce crime by depriving criminals of the proceeds of crime. If anyone is going to make the claim that the whole economy, even for the good guys, is running on the basis of the bad guys, I cannot accept that.
Lord Goodhart: I am deeply disappointed, and indeed astonished, by the extent to which I received a negative reply from the Minister. A real problem exists here. It may not affect a great many people, but it will certainly affect some.
The Minister said that, of course, a creditor runs many risks—bankruptcy of the debtor, and so on—and of course he does. But if, as a creditor, I had given entirely bona fide credit to someone and the reason that I did not have that debt paid was because a confiscation order had taken away all the debtor's money, I should regard the state as having stolen that money from me. The Government should think again about the matter. I disagree that it will sabotage the operation of the scheme. It seems perfectly possible for the court to deal with the problem without a great deal of effort. Some effort would be necessary and entirely appropriate.
While today I beg leave to withdraw the amendment, it is likely that I shall bring it back at a later stage.
Amendment, by leave, withdrawn.
6.30 p.m.
Clause 11 [Assumptions to be made in case of criminal lifestyle]:
[Amendment No. 20 not moved.]
Lord Kingslandmoved Amendment No. 21:
Page 6, line 113, leave out paragraph (a) and insert—
"(a) the defendant adduces sufficient evidence to raise an issue with respect to the matter"
The noble Lord said: I shall speak briefly to the amendment because its substance will be familiar to the Minister. It reflects a view espoused among others by Justice.
As the Committee is aware, reverse onus of proof clauses do not necessarily breach paragraph 2 of Article 6 of the European Convention on Human Rights. However, our courts have held that the imposition of a persuasive burden of proof on the defendant in respect of the crucial elements of an offence breaches paragraph 2 of Article 6. For example, in R v Lambert the Judicial Committee of your Lordships' House held that, in accordance with the principle of proportionality reverse onuses of proof clauses in the Misuse of Drugs Act 1971 should impose only an evidential rather than a persuasive burden of proof in order to comply with paragraph 2 of Article 6.
Although it may be open to the courts to interpret Clause 11 so as to impose an evidential burden only in accordance with the Human Rights Act, in my submission it should be clarified on the face of the legislation' that the burden to be imposed is evidential rather than persuasive. Indeed, reverse onus of proof clauses in recent legislation have been expressly drafted so as to impose an evidential burden only following human rights concerns expressed in your Lordships' House and another place—for example, in Section 118 of the Terrorism Act 2000 or Section 53(3) of the Regulation of Investigatory Powers Act 2000.
In short, a similar provision in Clause 11 would help to ensure that the reverse onus clauses in the Bill are applied in accordance with the principles of the convention. I beg to move.
Lord Thomas of Gresford: In supporting the amendment, speak also to Amendments Nos. 24 and 25 and their concurrent amendments in relation to Scotland. We are concerned also with the substitution of the legal or persuasive burden of proof as currently drafted with an evidential burden.
The general and sensible principle of litigation, whether civil or criminal, is that he who asserts must prove. It is difficult to prove a negative. Negative evidence is always circumstantial or indirect where a respondent must prove the existence of a fact, or a series of facts, which is or are inconsistent with the fact which his opponent is asserting and he seeks to disprove.
We have here in straightforward language a reverse burden of proof which, as the noble Lord, Lord Kingsland, said, always attracts the interest of the
66
lawyers who are engaged in considering the provisions of the European convention. The clause states that property transferred, held or purchased is the result of the respondent's general criminal conduct. That is the presumption that the court must make unless there is evidence to the contrary. As drafted, the respondent must prove a series of facts which are inconsistent with that proposition. For example, he must prove that he has been given money, won money on the horses, has had a bonus from the Stock Exchange or has had money from specific innocent sources. In principle, that is far too heavy a burden to impose upon an individual. The evidential burden should replace that which is drafted so that the respondent may discharge that burden by adducing evidence of a reasonable possibility of the existence of such facts and then leave it to the applicant—whether it is the prosecutor or whoever—to establish overall that the property is indeed the proceeds of crime.
Lord Goodhart: Amendments Nos. 25, 105 and 153 relate to a parallel matter but are not consequential on the earlier amendments with regard to what happens if an application is dismissed.
Under Clause 11(7), if the court does not make one or more of the required assumptions it must state its reasons. Whether or not the burden of proof is changed, if there is a serious challenge to the assumptions, even if that assumption were accepted and the challenge to it dismissed, the court should state its reasons. In such a case there would be the possibility of an appeal. It is surely a basic principle that where an issue has been debated fully before a court the court should be required to give its reasons whichever way that decision goes.
I do not suggest that the court should be required to give its reasons where there is effectively no challenge to the assumption. But where a serious challenge is made, natural justice requires that the court should be required to give its reasons whichever way it decides.
Lord Goldsmith: The key question is whether what is a persuasive burden should become an evidential burden.
The starting point must be the state of the existing law. The state of the existing law both under the Drug Trafficking Act 1994 and the Criminal Justice A ct 1988 is that the burden is on the defendant. It is not simply an evidential but a persuasive burden. Those provisions have been considered by this House and in the Court in Strasbourg and have been found in the circumstances to be acceptable.
What are those circumstances? The circumstances are that it is notorious that criminals can hide, through a paper trail—or a paperless trail—where proceeds of crime have gone. Secondly, there is the great practical problem of dealing with the situation. I indicated and do so again that if the defendant simply had to reply to a question, he could say, "The £10,000 that you found I won on gambling", or "I was given it by a man whose name I can no longer recall". Unconvincing though those statements may be, it would be for the prosecutor or the director to prove, contrary to those

67
assertions, that the money had come from a criminal source. In practical terms, that would be extremely difficult.
The defendant will always be in the best position to account for his assets. He will be able to say from where they came and how he acquired them. As I understand it, that is why the courts have accepted that while often, as the noble Lord, Lord Kingsland, said, it would be inappropriate to place on a defendant a burden of proving something in proceedings, in this situation the legislation so provides and the courts at the highest level have accepted that it is legitimate and proportionate in the circumstances.
Having regard to the fact that there is the additional safeguard of the serious risk of injustice proviso, the Government strongly take the view, as they did in another place, that it would not be appropriate to change the basis upon which the burden is set at present in the Bill. That is in no way unreasonable having regard to the practical problem and the fact that it is not an imposition on a defendant to explain where his property came from, bearing in mind that we are concerned with someone who has been convicted of a criminal offence. At this stage we accept only cases that arise after a criminal conviction. On the contrary, as upheld in the highest courts, it is reasonable, proportionate and legitimate.
I turn briefly to the point raised by the noble Lord, Lord Goodhart, of whether the court should give reasons. I have no doubt that the court will, in the kind of case to which the noble Lord referred, give reasons that will be recorded in a transcript, although there may be exceptional circumstances where that does not happen. In this place one must never say "always" because one never knows to what use it will be put hereafter. I would expect any court, before whom there has been a debate about whether an assumption is appropriate and it has decided to reject a defendant's case, or even to accept it, to give those reasons. I anticipate that that would happen in practice. With respect, I do not see a need to spell that out on the face of the legislation.
With what comfort my statement of expectation brings, at least in that respect, I hope that the noble Lord will not press the amendment. As to the main basis of the amendment, the opposition is strong for the reasons that I have given.
6.45 p.m.
Lord Kingsland: I thought that the noble and learned Lord would reply as he did. I understand his reasons for doing so. On the one hand, noble Lords have to address the interests of society in ensuring that conduct of the kind that we are seeking to penalise is properly penalised and, on the other hand, your Lordships have to balance against that the rights of the individual in the context of paragraph 2 of Article 6 of the European Convention on Human Rights. Your Lordships have to decide, as a matter of constitutional judgment, in which direction to lean. Our preliminary view is that the contents of the amendment reflect the
68
right balance. However, the noble and learned Lord is always persuasive at the Dispatch Box; so I shall read carefully what he said, reflect on it and consider whether to return to the matter on Report. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Buscombemoved Amendment No. 22:
Page 6, line 14, leave out "serious" and insert "real"
The noble Baroness said: In Clause 11 the court must make certain assumptions for the purposes of deciding whether or not a defendant has benefited from his general criminal conduct and for the purposes of deciding his benefit from the conduct. Those assumptions are set out in that clause. Those assumptions are, however, rebuttable assumptions. By subsection (6) a court must not make an assumption if the assumption is shown to be incorrect. The same subsection provides that the court must not make an assumption if there is a serious risk of injustice if the assumption were made.
We believe that that threshold is too high. We agree that if there were a serious risk of injustice, the assumption should not be made. We believe that if there is a real, as opposed to a serious risk, of injustice the assumption should not be made either. Our amendment seeks to replace the word "serious" with the word "real" which would lower the threshold to a more acceptable level. If the Bill remains in its current form, the court will have to make certain assumptions even where there is a real risk of injustice. Surely that cannot be right. While I have little sympathy with convicted criminals who have a criminal lifestyle, it is not right that we stoop to their level by subjecting them to a real risk of injustice. However low a man may be, he is still entitled to justice and if there is a real risk of injustice should certain assumptions be made, those assumptions should not be made. I beg to move.
Lord Goodhart: Although we have not put our names to these amendments, we on these Benches support them.
Lord Goldsmith: This is a short point. The existing legislation—the Drug Trafficking Act 1994 and the Criminal Justice Act 1988—uses the same expression as appears in the Bill, "serious risk of injustice". We want to maintain the concept in the existing legislation which has caused no difficulty.
The footnote to that is that the noble and learned Lord, Lord Steyn, in one of the judgments to which I referred earlier indicating that the reverse burden was acceptable, proportionate and legitimate, used those words. In the context of legislation that uses the expression "serious risk of injustice", he talked about whether there is or may be a serious or real risk of injustice. So it appears that in this House no real distinction, in any event, is judicially drawn between the two words. The main point is that we would not want to depart from the existing language which has

69
caused no difficulty. I hope that the noble Baroness finds that explanation helpful and will withdraw the amendment.
Baroness Buscombe: I thank the Attorney General for his response to the amendments. With great respect, I believe that there is a difference between "serious" and "real". Something can be real without being serious. I hear what he has said in relation to current law, but I still believe that what I have set out is correct, or more just. We shall consider the matter further and may return to it on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Goodhartmoved Amendment No. 23:
Page 6, line 14, at end insert—
"( ) Evidence that any property was transferred to or obtained by the defendant as winnings from betting or gaming is not evidence which shows that the first or second assumption is incorrect."
The noble Lord said: This is meant as a probing amendment. It proposes that there should be a new subsection which states that,
"Evidence that any property was transferred to or obtained by the defendant as, winnings from betting or gaming is not evidence which shows that the first or second assumption [in Clause 11] is incorrect".
Claiming that money has been acquired as winnings from gambling is in fact one of the easiest ways of laundering it. It is perfectly possible to do that while at the same time producing perfectly genuine documentation to show that winnings have been obtained. Let us take an obvious example. It would be perfectly possible in a race between, say, six horses to put a suitable level of bet on each horse. One claims the winnings and one has documentation to prove it, but simply destroys the documentation which shows that one also had losses on the same race.
It may well be—I hope it is the case—that the Minister will be able to say that my fears about this are ungrounded because if anyone claims that winnings were obtained from gambling he would also have to establish that the stake money itself was not obtained from the proceeds of crime. If it is, or it cannot be shown to have been obtained innocently, then the gambling winnings are also potentially subject to a confiscation order. If that is not the case, then something of the kind proposed in this amendment—I am not suggesting that the drafting is perfect—is required in order to stop up what otherwise might be a serious loophole in the operation of the Bill. I beg to move.
Lord Goldsmith: The noble Lord has raised one point to which I want to return concerning the stake money. But first I want to deal with the basic point, which I understood to lie behind the amendment: to disentitle a defendant from asserting that property was acquired as a result of gaming. The reason that we could not accept the amendment, to the extent that it precludes a defendant from doing that, is that indeed he may have received moneys from gaming. As I
70
believe I indicated at Second Reading, we were sympathetic to the thrust of the point made by the noble Lord in that he is right in identifying a possible way in which a defendant might seek to explain his earnings. He would still have to demonstrate that that was the case. He would have to show that the assumption was incorrect.
The fact is that besides gaming almost any use of cash can be relied on in the same way to explain why assets have been acquired. Equally, if the defendant dealt in cash as part of his business he could claim that money coming into it explained away criminal assets, but not alert the court to the fact that cash was also going out of his business. Any attempt to try to deal with this problem in the way proposed would result in an unacceptable level of injustice to the defendant. That is the main thrust of the point.
The noble Lord raised the additional question to which I shall not venture an answer this afternoon: what would the court make of a situation where these were the facts—that the court was satisfied that moneys had been obtained from gaming, but that the stake had itself been the proceeds of crime? I simply do not know how likely it is that the court would get into that factual situation. Everything is theoretical and therefore very interesting for lawyers to consider. One would need to consider whether, as regards Clause 11, the relevant assumption would be that the property was obtained as a result of general criminal conduct, and whether the court would say, if it was obtained as a result of using a stake which was the proceeds of crime, that that in itself constitutes for these purposes property obtained by reason of criminal conduct. I do not want to venture an answer to that, but simply pose the question. I undertake to give further thought to it. As regards the basic amendment, for the reasons I have given, and respecting the spirit in which lit has been put forward, it cannot be accepted.
Lord Goodhart: I am grateful to the noble and learned Lord for that answer. We are concerned to strengthen the Bill where we believe it needs strengthening. We believe that this amendment applies to one of those places. I accept that one cannot justify a general prohibition on all winnings from gaming being treated as though they were part of the proceeds of crime. But I believe that if' there is a burden on the defendant to prove the source of assets, there should be a burden on the defendant to prove that the stake money which produced the winnings was itself innocent money rather than money acquired by crime. Unless in the interim the Government produce something which is more acceptable, it could be a matter we would wish to return to at Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 24 and 25 not moved.]
Clause 11 agreed to.
Clause 12 [Time for Payment]:
Baroness Buscombemoved Amendment No. 26:
Page 7, line 2, leave out from "period" to end of line 3.

71
The noble Baroness said: The purpose of this amendment is to seek to prevent fettering the discretion of the court in exceptional cases. It concerns time for payment under a confiscation order.
There are frequently persons who have been convicted of offences and against whom confiscation orders have been made, but who do not have funds to pay them; for example, persons who have been convicted of supplying drugs to feed their own habit and, following sentence, they and their family are legitimately on benefit with no assets. Currently, those persons are ordered to pay, say, £2 or £5 per week towards the confiscation order. If there are no means with which to pay then a mandatory time limit is pointless and could lead to a default prison sentence with the order still to pay. We suggest that these are not the categories of persons against whom the Bill is aimed, but they may commonly fall within its remit. I beg to move.
Lord Rooker: I shall reply to the thrust of the amendment. It is technically defective in that Clause 12(4) would need to be deleted to give indefinite time to pay. The only effect of this amendment as it stands is that an application could be made at any time after the end of the specified period. But if the 12 months has already expired under Clause 12(4) the court would not be able to grant the application.
The effect of the amendment is to give the court the power to grant unlimited time to pay a confiscation order. Clause 12 sets out to address one of the main problems of the current system for enforcing confiscation orders. They are basically enforced like Crown Court fines.
One of the consequences of the regime is that the Crown Court, when it makes a confiscation order, has the power to allow payment by instalments and time to pay. There is some evidence of the unacceptable use of the present powers. We are informed that the present typical period seems to be between two and three years. To improve matters we are abolishing payment by instalments and placing a finite limit on the court's power to allow time to pay.
This Bill expects offenders to pay their confiscation orders straightaway, as provided here. The amount of the confiscation order is based on the value of the property available for enforcement when the order is made and not on an assessment of future earnings. Only if an offender produces a particular reason justifying time to pay should any time be allowed.
In no circumstances do we consider that the period should be extended beyond 12 months. Even if there are exceptional circumstances, no defendants should take more than a year to dispose of their assets in order to satisfy a confiscation order.
Far from speeding up enforcement, these amendments would preserve the open-ended payment regime that is one of the current system's weak points. I hope that in the light of my remarks the noble Baroness will withdraw her amendment.
7 p.m.
Baroness Buscombe: I thank the Minister for his helpful response, which I entirely accept. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 agreed to.
Clause 13 [Interest on unpaid sums]:
[Amendment No. 27 not moved.]
Clause 13 agreed to.
Clause 14 agreed to.
Clause 15 [Postponement]:
Lord Rooker moved Amendment No. 28:
Page 8, line 9, leave out subsection (1) and insert—
"(1) The court may—

(a) proceed under section 6 before it sentences the defendant for the offence (or any of the offences) concerned, or

(b) postpone proceedings under section 6 for a specified period.

(1A) A period of postponement may be extended."
On Question, amendment agreed to.
[Amendment No. 29 not moved.]
Clause 15, as amended, agreed to.
Clause 16 [Effect of postponement]:
[Amendment No. 30 not moved.]
Lord Rookermoved Amendment No. 31:
Page 9, line 29, leave out paragraph (b).
On Question, amendment agreed to.
Clause 16, as amended, agreed to.
Clause 17 [Statement of information]:
Baroness Buscombemoved Amendment No. 32:
Page 9, line 38, at end insert—
"( ) The content of the statement shall be drawn up in a manner conforming to guidance issued to the Director by the Secretary of State under Schedule 2(5) hereof."
The noble Baroness said: The purpose of the amendment is to ensure quality and to standardise requirements for the contents of the statement of information.
Clauses 17 to 19 deal with the provision of information by the prosecution and by the defendant in confiscation proceedings. Information provided by the prosecution in such proceedings is often extremely sketchy and sometimes almost non-existent in nature. Examples of half a side of A4 paper constituting a statement from the prosecution are not unknown.
The Bill does not address the content of any statement of information provided by the prosecution under Clause 17, simply stating that information must be relevant in deciding whether a defendant has a criminal lifestyle, and whether he has benefited from his general criminal conduct. A code of practice which sets out in a little more detail the actual information that must be provided by the prosecution, or indeed the defendant, would ensure quality and standards.
It is important to note that where the court of its own motion proceeds to confiscation, it may decide that there is no need for a statement to be made by the

73
prosecution or the director. The fact that the court: is proceeding of its own motion rather than the prosecution requesting confiscation should not remove the need for the prosecution to provide a statement of information. We believe that that is illogical.
We welcome Clause 17(4)(b), which requires the prosecution or the director to include information in any statement if an assumption being made would result in a serious risk of injustice. Presumably this is one of the "safeguards" which have been identified by the Government as protecting an individual defendant from what remains a draconian power. I beg to move.
Lord Goodhart: The other amendments in the group—Amendments Nos. 33 to 35, 113 to 115 and 157 to 159—stand in our names. They refer to the information which the prosecutor or director must place before the court in proceedings for a confiscation order.
Under Clause 17, the director or prosecutor must provide a statement of information. Under subsection (3) the statement of information is a,
"statement of matters the prosecutor or the Director believes are relevant",
in deciding whether the defendant has a general criminal lifestyle and has benefited from it.
The reference is not to "the matters" or to "all matters"; it is merely to "matters". The wording is similar in subsection (4) in relation to information relevant to the assumptions that are to be made under Clause 11. Under Clause 17(5),
"If the prosecutor or the Director … does not believe the defendant has a criminal lifestyle",
it alleges a benefit from his particular criminal conduct.
I believe that the prosecutor or the director should be required to include all information in the statement which he believes is relevant. That would include information which, for example, might be inconsistent with the claim of there being a criminal lifestyle.
Amendments Nos. 33 to 35, as I have said, amend Clause 17 to ensure that all the information which the prosecutor or the defendant thinks is relevant must be included in the statement of information. I accept that it may be the intention anyway, but an amendment of this kind would clarify that and clear up a matter that is not clear at present. The later amendments apply to the Scottish and Northern Ireland situation.
Lord Rooker: Amendment No. 32 relates to an operational matter. The Secretary of State is not the person who is best placed to lay down guidance. We see no reason why the Secretary of State should be required to issue guidance to the director, or to anyone else for that matter, as to the contents of a statement of information. It is not a proper function for the Secretary of State. In any case, we see no reason why the contents of a statement should be formalised. There should be some flexibility to allow the statement to contain what is necessary on a case-by-case basis.
74
The amendment relates to existing legislation with which I am personally unfamiliar, but the statement system has been in place for 15 years. I am told that it has been one of the more successful elements in the confiscation regime. We have received no complaints about its operation. After that period of time, therefore, it appears to have been tried and tested.
In response to the noble Lord, Lord Goodhart, we do not believe that the amendments are necessary. The effect of Clause 17 as drafted is that the statement must include all relevant information, simply because it does not contain any exceptions. If the court considers that it needs more information, it can ask for that information under Clause 17(6). I hope that the noble Baroness and the noble Lord find that answer satisfactory.
Baroness Buscombe: I thank the Minister for his response which is a little disappointing. I agree that there should be flexibility on a case-by-case basis. Some form of guidance would not necessarily disallow that flexibility; it might even encourage the production of more information relevant to each case so that a proper judgment could be made as to whether a defendant has a criminal lifestyle. I repeat that information provided by the prosecution is often in practice bald, extremely sketchy and barely existent. We believe that guidance notes would make a positive contribution to the Bill.
However, I hear the Minister. I am disappointed but I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 33 to 35 not moved]
Clause 17 agreed to.
Clause 18 agreed to.
Clause 19 [Provision of information by defendant]:
Lord Thomas of Gresfordmoved Amendment No. 36:
Page 11, line 24, at end insert—
"( ) Information given pursuant to an order under this section may not be used in evidence against the defendant in criminal proceedings, other than in proceedings under section 6."
The noble Lord said: The purpose of the amendment is that information given under Clause 19 shall not found a subsequent criminal prosecution. That is not the purpose of the clause, which is part of a quasi administrative procedure in which the civil standard of proof operates.
The court will make an order requiring
"all or a specified part of the information to be given in a specified manner"
and the sanction appears to be not that refusal to obey the order would amount to contempt of court but that
"the court may draw such inference as it believes is appropriate"
if the defendant fails to respond. I should welcome the Minister's assurance that contempt of court would not arise if an order were not obeyed in those circumstances.
Essentially this is the Saunders point and I can do no better than remind your Lordships of two passages from the judgment of the European Court of Human

75
Rights. Paragraph 68 refers to the right not to incriminate oneself, which presupposes that the prosecution in a criminal case seeks to prove its case against the accused without resort to evidence obtained through methods of coercion in defiance of the will of the accused. In that sense, the right is closely linked to the presumption of innocence contained in Article 6, paragraph 2 of the Convention. Your Lordships will recall that Mr Saunders was required to answer questions that were put to him by Board of Trade inspectors.
Paragraph 74 of the judgment stated that it did not accept the Government's argument that the complexity of corporate fraud, the vital public interest in the investigation of such fraud and the punishment of those responsible could justify the marked departure in that case from the basic principle of a fair procedure. It continued that the general requirements of fairness contained in Article 6, including the right not to incriminate oneself, should apply to criminal proceedings in respect of all types of criminal offence, without distinction, from the most simple to the most complex and that the public interest should not be invoked to justify the use of answers compulsorily obtained in a non-judicial investigation to incriminate the accused during the trial proceedings.
I appreciate that that judgment refers to a non-judicial investigation but that does not amount to a significant distinction from the provisions of the Bill. If that is the view that has been clearly expressed by the European Court of Human Rights, our amendment is one that we hope the Government will accept. I beg to move.
7.15 p.m.
Lord Rooker: In the spirit of our debate, I shall consider the matter and return to it on Report.
I shall seek advice on the issue of contempt and will write to the noble Lord, Lord Thomas, well in advance of the Report stage.
Some people might argue that there is a respectable case to be made that evidence provided by the defendant in responding to an order under Clause 19 should be capable of being used against him, or indeed against others in separate criminal proceedings. We do not think that these orders are in the same category as orders to provide evidence under compulsion, such as in Saunders.
Clause 18(6) contains a provision that is very similar to that intended by the amendment. It goes further than the amendment in that it prevents the evidence from being used in the criminal trial of any person, not just the defendant. The provision has nothing to do with the Saunders judgment. The thinking underlying Clause 18(6) is that defendants are more likely to be honest and forthcoming about their benefit if the evidence they provide in response to a statement of information cannot be used to incriminate them or their associates.
Our thinking hitherto has been that Clauses 18 and 19 are different in the sense that Clause 18 statements invariably make allegations as to the defendant's
76
criminal conduct, whereas Clause 19 orders are unlikely to do so. It may be that the same issue is capable of arising under both clauses in much the same way.
However, as I said, I shall consider the amendments tabled by the noble Lord, Lord Thomas, and come back to them on Report.
Lord Thomas of Gresford: I am grateful to the Minister for his response and ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 19 agreed to.
Clause 20 [No order made: reconsideration of case]:
[Amendment No. 37 not moved.]
Lord Rookermoved Amendment No. 38:
Page 12, line 1, leave out paragraph (b).
On Question, amendment agreed to.
Clause 20, as amended, agreed to.
Clause 21 [No order made: reconsideration of benefit]:
[Amendments Nos. 39 to 41 not moved.]
Lord Rookermoved Amendment No. 42:
Page 13. line 43, leave out paragraph (b).
On Question, amendment agreed to.
Clause 21, as amended, agreed to.
Clause 22 [Order made: reconsideration of benefit]:
Lord Rookermoved Amendment No. 43:
Page 14, line 32, at end insert—
"(aa) there is evidence which was not available to the prosecutor or the Director at the relevant time,"
The noble Lord said: I am not complaining about the noble Baroness, but by not moving the first amendment when many others are grouped with it, she presents considerable difficulty to me. I shall explain the thinking behind the Government's amendments but I shall not discuss the amendments tabled by the Opposition because they were not moved.
The government amendments arise out of a point raised in the other place about Clause 22, as recorded in the Official Report on 27th November. First, under Clauses 20 and 21, the prosecutor and the director of the agency are allowed to apply to the court for a revaluation of the defendant's benefit from crime only if they have new evidence. Currently, there is no requirement of this kind in Clause 22. In theory, they could apply to the court on the basis of evidence that they have held in previous proceedings.
The question raised in the other place was whether the clause should not be brought into line with Clauses 20 and 21 in this respect. We agree that it should. The first purpose of the amendments is to make that clear. The director and the prosecutor will be able to apply under Clause 22 only if their evidence is new.
Secondly, our intention has always been that more than one revaluation should be possible under Clause 22. In looking again at the reconsideration clauses, we

77
doubt whether the wording of the clause currently achieves that intention. It appears to allow for one application only. We have accordingly taken the opportunity to make it quite clear that there may be more than one revaluation under Clause 22. We have also made changes to Clause 23, making it clear that more than one application can be made under Clause 23.
Finally, Clause 23 permits the prosecutor and director to apply to the court for an increase in the confiscation order where more realisable property comes to light. Arguably, the clause does not allow such an application to be made where a confiscation order has been varied under Clause 22. We have taken the opportunity to put it beyond doubt that such applications are permissible.
These government amendments are very much fine-tuning amendments in one of the more technical areas of the Bill. However, they will help to ensure that it operates exactly as we would wish. I beg to move.
On Question, amendment agreed to.
Lord Rookermoved Amendments Nos. 44 and 45:
Page 14, line 35, leave out from first "the" to end of line and insert "relevant amount"
Page 14, line 38, leave out "on which his belief is based"
On Question, amendments agreed to.
[Amendment No. 46 not moved.]
Lord Rookermoved Amendments Nos. 47 and 48:
Page 15, line 18, leave out from first "the" to "the" in line 19 and insert "relevant amount"
Page 15, line 45, at end insert—
"(11A) The relevant time is—

(a) when the court calculated the defendant's benefit for the purposes of the confiscation order, if this section has not applied previously;

(b) when the court last calculated the defendant's benefit in pursuance of this section, if this section has applied previously.

(11B) The relevant amount is—

(a) the amount found as the defendant's benefit for the purposes of the confiscation order, if this section has not applied previously;

(b) the amount last found as the defendant's benefit in pursuance of this section, if this section has applied previously."

On Question, amendments agreed to.
Clause 22, as amended, agreed to.
Clause 23 [Order made: reconsideration of available amount]:
Lord Rookermoved Amendments Nos. 49 to 51:
Page 16, line 17, leave out from third "the" to fourth "the" in line 18 and insert "relevant amount"
Page 16, line 22, leave out "(when the confiscation order was made)"
Page 16, line 37, at end insert—
"(7A) The relevant amount is—

(a) the amount found as the available amount for the purposes of the confiscation order, if this section has not applied previously;

78

(b) the amount last found as the available amount in pursuance of this section, if this section has applied previously.

(7B) The amount found as the defendant's benefit from the conduct concerned is—

(a) the amount so found when the confiscation order was made, or

(b) if one or more new calculations of the defendant's benefit have been made under section 22 the amount found on the occasion of the last such calculation."

On Question, amendments agreed to.
Clause 23, as amended, agreed to.
Clauses 24 and 25 agreed to.
Clause 26 [Small amount outstanding: discharge of order]:
Baroness Buscombemoved Amendment No. 52:
Page 18, line 3, leave out "£50" and insert "£500"
The noble Baroness said: This amendment deals with a small point; namely, to allow for de minimis considerations in discharge of orders. The purpose of the power to discharge is that, where there are no assets left with which to discharge the order, £50 is such a low sum that it is almost meaningless. Any legal or court costs in considering the application would far outweigh that sum. Where there is no ability to pay but the circumstances do not fall under the Clause 24 inadequacy provisions, we believe that the court should be able to exercise sensible discretion—in which case we suggest that £500 is a more meaningful sum. I beg to move.
Lord Rooker: It may be useful to the Committee if I explained a little more of the background to Clause 26 at this point.
Representations have been made to us by justices' chief executives that the current legislation contains no provision whereby a confiscation order can be written off where only a small amount is remaining and cannot be satisfied. Consequently, such sums remain on the books of the justices' chief executives indefinitely and cannot be removed from court records, This clause responds to those concerns and allows the justices' chief executives to apply to the Crown Court to write off a confiscation order where all that remains is £50, or below.
We have considered carefully at what level to set the threshold. We did not want to pitch the level too high in order not to create the impression that defendants need not pay their orders because they know that they will be written off. As this is a new power, we believe that the level is modest and about right. If it turns out to be too low, it will be open to the Secretary of State to make an order to raise the threshold by virtue of subsection (3). In the light of that explanation, I hope that the noble Baroness will be satisfied and feel able to withdraw her amendment.
Baroness Buscombe: I thank the Minister for his response, for which I am grateful. I am also grateful to him for offering further background on the drafting and meaning of Clause 26. I entirely understand what the noble Lord said with regard to not wishing

79
defendants to believe that the sum would just be written off. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 26 agreed to.
Clause 27 agreed to.
Lord Davies of Oldham: I beg to move that the House do now resume. In moving the Motion, perhaps I may suggest that the Committee stage begin again not before 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Industrial and Provident Societies Bill
Brought from the Commons; read a first time, and to be printed.

Wireless Telegraphy (Television Licence Fees) (Amendment) Regulations 2002
7.27 p.m.
Baroness Anelay of St Johnsrose to move, That an humble Address be presented to Her Majesty praying that the regulations, laid before the House on 11th March, be annulled (S.I. 2002/641).
The noble Baroness said: My Lords, this statutory instrument will increase the colour television licence this year from £109 to £112. I have tabled the Motion in order to ask the Government to justify that increase, and to give a progress report on the way in which the licence-fee payers' money—and, of course, taxpayers' money—is being spent on the development of digital programming. Tax increases usually have to be debated in Parliament, but the licence fee can be increased by statutory instrument that is subject to the negative procedure; in order words, it slips silently into operation unless someone tables a Motion to debate it.
Approximately 1.2 million people do not buy a television licence, although they own a television set and are legally required to pay the fee. About 150,000 cases a year are taken to magistrates' courts in order to prosecute those non-payers. I was, therefore, intrigued to read in The Times of 18th March that the chairman of the BBC, Gavyn Davies, went out with the licence detector vans last month to ask some of those people why they were unwilling to pay the £109. He said that he was staggered by the number of people who evaded paying, and commented:
"There were people who obviously found it difficult to pay £109".
I can assure Mr Davies that they will find it even more difficult to pay £112. The chairman went on to say:
"It was those people who reinforced in my mind the view that we have to serve everybody".
80
Of course, he is absolutely right on that point—but that is the whole point of being a publicly-funded broadcaster and not having to chase ratings for commercial success.
I sat as a magistrate for some 13 years before coming to your Lordships' House. During that time I heard hundreds, if not thousands, of cases relating to people who had not paid their licence fee. To my recollection, not one of those people ever told the court that they did not pay up because the BBC did not serve their needs, but was being hijacked by the middle classes who, according to Mr Davies recently, have a disproportionate amount of programming allotted to them. Their main problem was simply that the licence fee was one more bill among the many that they could not or would not pay. The fact is that the licence fee is now higher than expected when a settlement was reached after the Broadcasting Act 1996 which introduced the plans to launch digital television. We recognised then that there would be costs associated with developing digital programming and the licence fee was adjusted according to the best estimates available at the time.
Then, in 2000, this Government substantially increased the funding for the BBC in order to underwrite its plans to go digital. At that stage, noble Lords may remember that the BBC asked for an extra £700 million a year. The Government said that the BBC had not told them why it needed quite that much money, so they said that it could have just an extra £200 million per year, still, as far as one can tell, without requiring full justification from the BBC. As Claire Ward, the Minister's honourable friend in another place, pointed out on 21st February of that year,
"when the BBC appeared before the Select Committee, it was unable to give a convincing explanation of why it wanted the extra funding and of what it would do with it".—[Official Report, Commons, 21/2/00: col. 1249.]
I have always made it clear that that rise may indeed have been justified. The problem is quite simply that we were never given the evidence to prove that it was. The BBC received an extra £200 million a year of our money and the licence fee payer had to face a larger than expected increase in the annual tax on owning a TV set. The fee rose by double the rate of inflation between 2000 and 2001. The Government ignored the evidence produced by the Institute of Fiscal Studies that, under such arrangements, 71 out of every 100 of the poorest households would be worse off.
Over the past year, the BBC has been launching its new digital TV channels. It is also busy developing five new national radio services which will be available through all digital formats. So far the only glitch has been that the plans for BBC3, which were submitted to the Government in February 2001, were rejected. In December last year the BBC resubmitted a new, revamped proposal. We are still waiting for the Government to make up their mind about it.
It really is coming to the stage where it is intolerable for the Government to dither so long over this decision. What the Government need to do is their business; that is, reach a decision, so that the BBC can

81
do what is its business; that is, either get on and develop BBC3 or, if the Government again say no, at least adjust its business plans accordingly.
In the meantime, last month Gavyn Davies told the Westminster Media Forum, chaired by the noble Lord, Lord Lipsey, who is in his place, that the BBC still has at least £80 million in the bank which should have been spent on BBC3. Have the Government taken that into account in justifying this year's increase in the licence fee?
It is rather ironic that the BBC is now chaired by the very same person who in 1999 said in his report on the future funding of the BBC that it was unfair to charge analogue households for the development of digital services which they could not receive. That is exactly what is happening now. Can the Minister confirm that over 64 per cent of households still do not have access to digital programmes but are being asked to pay for their development? What measures will the Government take to provide information to the consumer to help him or her make informed decisions about the take-up of digital television so that we can progress more quickly towards analogue switch-off? Only at that stage will all licence fee payers receive equal value for their annual payment.
While we are on the subject of analogue switch-off, it would be remiss of me not to refer to the fact that it was announced on the news tonight that ITV Digital will be sold off as a going concern after negotiations with the Football League appear, sadly, to have collapsed. I appreciate that that announcement casts a long shadow over the future of broadcasting in the digital age.
The Minister will be aware that it has been reported in the press that the Government expect the BBC to come to the rescue of ITV Digital customers in some form or other and then to continue the development of digital terrestrial television as an alternative platform to those of satellite and cable. If that were to happen, what would the Government expect to be the impact on the licence fee? Would we end up being licence fee payers also paying subscriptions to satellite and cable providers, in effect subsidising the users of digital terrestrial programming? This is a complex issue and one that. after today's announcement, must be addressed as a matter of prime importance.
I appreciate that not all households are required to pay their licence fee, although they must apply for and hold a licence. There are households in which one member is over the age of 75 and their licence fee is paid by the general taxpayer. Can the Government give an estimate of how much the taxpayer will provide for that in the period 2002–03, the year covered by the regulations?
I have approached this debate from my viewpoint as a friend of the general taxpayer, as a friend of the licence fee payer—of which I am one—and certainly as a candid friend, as always, of the BBC. The cost of digital broadcasting is going to be high; today we are even more acutely aware of that. It should be a price worth paying if the Government get it right, but we must be sure that the price is no higher than necessary and that the value we receive is right for the price.
82
It is right that we should always recognise the BBC's achievements and its important role in setting the benchmark of quality in both national and international broadcasting. I believe that the BBC has made and must continue to make a major contribution to the cultural life of our nation. Personally. I think that our broadcasting environment would be damaged beyond belief if the BBC was not a star player in it. However, we have to recognise that the world of broadcasting is changing rapidly. The explosion of choice raises fundamental questions about the current and future role of the BBC. No doubt we shall have a valuable debate in full on that in the forthcoming communications Bill. I relish taking part in those discussions.
Tonight, however, we have an opportunity to start the ball rolling with a focused debate on the licence fee itself. I beg to move this humble Address and hope that it receives the support of noble Lords.
Moved, That an humble Address be presented to Her Majesty praying that the Wireless Telegraphy (Television Licence Fees) (Amendment) Regulations 2002, laid before the House on 11 th March, be annulled (S.I. 2002/641).—(Baroness Anelay of St Johns.)
Lord Hussey of North Bradley: My Lords. I must first declare an interest as I was chairman of the BBC from 1986 to 1996 and was therefore involved in many discussions about the licence fee. The noble Baroness, Lady Anelay, has proposed that the regulations laid before the House on 11th March be annulled. It is the system under which the licence fee is arranged that I should like to raise with noble Lords rather than the details on the recent adjustment.
The licence fee is an integral part of the BBC's charter, renewed roughly every 15 years, and comprises a high percentage of its revenue. When I joined the BBC in 1986, there was a fierce debate about its level. Into that debate, the noble Lord, Lord Barnett, the vice-chairman and, as noble Lords know, a man of great wisdom, and I were pitched. The executives sought a very much larger increase than we believed could be justified. In those days there was commercial television and Channel 4, but no satellite, cable or digital services.
The debate followed a report produced by Professor Peacock, recommending that the licence fee should be linked to the retail prices index. That struck the noble Lord, Lord Barnett, and myself as a fair solution, acceptable to all those who had to pay it. We also believed, unlike the executives, that the BBC was not short of money. In fact, we thought that it was sloshing through the corridors of Broadcasting House in a great, unending stream.
We argued with the executives that the R PI would be a reasonable and fair settlement, acceptable to the Government and to the public, who had to pay it, but in particular to the Government, whose Prime Minister had already described the licence fee, not inaccurately but certainly not kindly, as a compulsory levy enforced by criminal sanctions.

83
There are only three ways of financing the BBC: by direct grant from government, by advertising or by an agreed formula. The noble Lord, Lord Barnett, and I settled for the Peacock formula, following the RPI, believing that the BBC already had ample funds for its purposes. Underlying that argument was the power of the BBC, emphasised by the noble Lord, Lord Callaghan, who had added:
"But with that power comes an equal responsibility for impartiality, honesty and accuracy".
The compulsory levy argument illustrates the corollary that the BBC must show that the millions it receives are rewarded by a clear demonstration of those qualities emphasised by the noble Lord, Lord Callaghan.
Many years earlier, Lord Reith had laid down the BBC objective:
"To carry into the greatest numbers of homes everything that is best in every department of human knowledge, endeavour and achievement".
And, indeed, Michael Grade has always regarded the BBC as the arbiter of standards.
The licence fee settlement is normally—I do not know about this occasion—the culmination of endless discussions at the BBC, by the BBC with various interested parties, not least political. Herein lies the clash. If the BBC exercises properly its remit it is inevitable that governments or oppositions will quarrel about the accuracy or justice of BBC programmes. Indeed, I would go further. Although I am no politician I have a keen interest in current affairs, and if there were no disputes between the politicians and the BBC, the BBC would probably not be carrying out its responsibilities so clearly clarified by the noble Lord, Lord Callaghan, and Lord Reith.
The independence of the BBC is rooted in the licence fee. Universally paid by everyone under 75, and enforced by the Government, the funding of the BBC is a touchstone of the confidence Parliament has in exercising the power entrusted to it.
The noble Lord, Lord Callaghan, summed up the current position when he said that democracy can exist only if there is a constant stream of information from politicians, governments, the press, television and radio. But he added that the new technology has radically altered the scene so that the media now not only records the news but can make the news, decide what is the news, or, even more dangerously, decide what is not the news.
There must always be a place for a powerful media voice that is not in the pocket of an individual proprietor nor interest group nor advertiser; a voice which does not give paramount weight to the choice of programmes for what will earn the most money from subscription, advertising or circulation—none of which is a recipe for high standards—but offers instead schedules to tempt audiences and uplift their interest and understanding. This is a demanding and honourable objective and the funds necessary to achieve it are delivered by the Government, usually
84
after a whole series of meetings, luncheons and discreet explanations, all arguing about what is a fair and proper level for the settlement.
We are reaching a stage when the "compulsory levy" might possibly be looked at in a different way. This is a very difficult and confused area. If the National Audit Office, for example, was able to access the process and assumptions, I wonder whether Parliament would feel more comfortable about the result and, in consequence, have done something to lance this regular boil which springs up every time the licence fee is renewed. If it were possible for the National Audit Office to look at this issue, look at the process and look at the results, I believe we would solve a problem which is constantly coming back. That would be very much in the interests of licence payers.
7.45 p.m.
Lord Lipsey: My Lords, the licence fee is a stinking, lousy, rotten, unfair, unjust poll tax. Someone on the national minimum wage has to complete a full week's work to earn enough to pay it. I therefore very much regret to this day that the Government turned down the proposal made by the Davies panel in regard to the BBC licence fee that the extra money needed by the BBC should come from a digital licence fee, which would fall more fairly on less poor people rather than on licence payers. That is water under the bridge, but I shall require the strongest possible arguments before I am convinced that the increase proposed by my noble friend is justified.
I require the strongest possible arguments and I believe that they exist. It is fashionable to argue that the advent of digital TV and the proliferation of channels and programmes means that public service broadcasting no longer has a role to play. It may be fashionable to argue it, but the reverse is the case. For instance, the more of those kind of channels that we have, the more we require public service broadcasting. If you divide the broadcasting cake among 500 channels, the amount per hour spent on programmes plummets. Without the BBC and the public service broadcasters to set standards that would mean cheap programming to the great disadvantage of the viewing public.
If we did not have public service broadcasters there would also be a great worry in regard to monopoly. That has come a step nearer with the near platform monopoly that Rupert Murdoch will enjoy as of tonight unless a buyer is found for ITV Digital.
There are public service broadcasters other than the BBC. It is a great mistake to think of the BBC as being the only public service broadcaster. There is Channel 4 and there are onerous public service obligations on Channel 5 and on ITV. But, at the moment, the commercial public service broadcasters are in a weak position because of the slump in advertising. According to the ITC report last week, it was some 7 per cent down in the year to 11th September, but that underestimates the true situation because it has gone on falling since then.

85
When advertising falls off a cliff like that there is a delay before the programming falls with it because budgets cannot be cut in an instant. I am afraid that we have not yet seen the full effect on programmes of that cut in the budgets of commercial public service broadcasters. In such a situation we have to rely very heavily on the BBC to provide the quality of public service broadcasting that will complete the crucial broadcasting ecology and keep up the standards of programming.
I do not often disagree with the noble Baroness, Lady Anelay of St. Johns, but I do disagree that the broad case for the increase in the licence fee of 1.5 per cent above inflation when it was accepted by the Government two years ago was not investigated. The BBC put its proposals to Davies. As the noble Lord, Lord Gordon of Strathblane knows, the panel crawled over them for hour after hour, day after day, meeting after meeting and trimmed them back to what it felt was fair. That was not the end of the process. 'The Government then called in their own independent accountants to have a crawl of their own.
It is perfectly true that Gerald Kaufman, the chair of the Select Committee in another place, did not think that the case had been made. He never would. He is against the BBC. He wants it privatised. So he would never think I hat it had made the case for more money. But if ever a case was made, it was made for that increase.
I question whether it is enough. It is not an awful lot— it is only 1.5 per cent above inflation—and as in general broadcasting costs rise not in line with inflation but in line with earnings, there is not a great pot of money being handed to the BBC.
On reflection, however, I think it is enough for the following reasons. First, there have been enormous savings under the John. Birt regime at the BBC of £700 million a year—which is often forgotten in the criticisms made of John Birt—which has made possible its present achievements. Secondly, bureaucracy can be cut further. Last year the bureaucratic costs of the BBC went down from 24 per cent of its budget to 19 per cent. That is good progress, but I do not believe that even the BBC's friends would suggest that there is no more fat to cut. Anyway, if you gave them more money they would want to put more into BBC 3, which is the greatest waste of the licence fee payers' money ever invented by man or beast. I strongly hope that my noble friend will persuade the Secretary of State finally to turn it down.
In all these matters of funding there is a balance to be struck between too much and too little. This is an important moment at which to have a strong BBC and I think that the Government have got the balance just about right in the order.
Lord Blackwell: My Lords, I welcome the opportunity to debate this issue. To borrow a phrase much used by the Government, I wonder whether increased funding ought not to be linked more strongly to reform. Like others, I believe that there is a good case for public service broadcasting in the UK. I also
86
think that there is a good case for the BBC a s an institution. Like others, I am a great fan of the BBC. However, in the current environment it is a huge fallacy to believe that public service broadcasting and the BBC are necessarily synonymous. Given the breadth of competitive broadcasting available, one can no longer sustain the argument that anything broadcast by the BBC is necessarily public service broadcasting just because the BBC broadcasts it. That is clear when we consider some of the output procured on the open market, which is very similar to that procured from the same sources by other channels. How can one be public service broadcasting and the other not?
As the noble Lord, Lord Lipsey, pointed out, it is also a fallacy to believe that the BBC is the only place where public service broadcasting can take place. That is clearly not the case any more, although the BBC may well be the best place for certain public service broadcasting in particular areas, such as the World Service.
It is also a fallacy to believe that if the Government wish to fund digital broadcasting in the UK, the 1313C, through the licence fee, is the best or only place to fund that. There may be a case for some provision that is not part of a general licence fee settlement.
If public service broadcasting is considered as a separate case for funding, the clear logic in the current environment is that, while the BBC might be funded for its public service roles, it should have to move to seeking direct or commercial funding for the other output that does not form part of the public service remit. I do not accept the argument that exploiting the BBC brand to seek commercial funding would necessarily lower standards. If one had the BBC brand as a commercial asset, the first thing one would do is protect the quality and premium rating of that brand and try to exploit it rather than take it downmarket. There is no necessary conflict between the BBC seeking commercial or direct funding from viewers and the desire that we all have to maintain quality standards at the BBC.
The BBC's settlement under the last charter renewal should be seen as funding for a transition period. The BBC should have a plan and an expectation that over the course of that settlement it will move to reflect the reality of the current competitive marketplace, with more of its output being funded commercially and only that part that is truly public service broadcasting being funded through public sources. I would certainly support and accept the funding of a licence fee that was set against such a transition plan.
The problem that I have with this settlement and the annual settlement that we have before us is that they are delinked from any plan of that nature. I do not believe that they will take the BBC any closer at the end of the current charter period to being the kind of organisation that needs to be in place for the future. We should be cautious about simply ratifying a year-on-year increase in the licence fee. The Government

87
should seek from the BBC a plan that more properly reflects the transition that will be needed for the future of the BBC.
Lord Stoddart of Swindon: My Lords, it is useful to have this debate tonight. The more we discuss the BBC the better it will be for the BBC. The proposed increase is very modest, even if it is a little above the inflation rate. The television licence is excellent value for money, bearing in mind the services provided. We get two national terrestrial channels with 24-hour coverage, plus the regional television channels and the digital channels, which are being further developed. The licence fee also covers free national and local radio and the development of new digital radio stations. That is not bad. All that for just over £2 a week is a remarkable achievement and a bargain at any reckoning.
Compare that with buying a daily newspaper for a week. The Telegraph, if you take it at the weekend as well, will cost £4.35 and the Mail will cost £3.50. That is just for a newspaper for a week. We get all those services from the BBC for just over £2 a week, which is probably about the cost of hiring a video film for a weekend. Let there be no doubt that it is good value for money. I therefore remain a supporter of a public broadcasting arm.
However, over the next few years there is bound to be change in management and programming, not to mention the changeover to digital transmission, which the noble Baroness raised in her opening remarks. This is not the time to go into the long-term future, but it is legitimate to reiterate some concerns about the BBC. A public service broadcaster should strive for excellence and shun dumbing down. The great strength of the BBC over its lifetime has been the raising of standards of awareness, taste, education and fairness. Those qualities have gained for the BBC the support and respect of people in Britain and throughout the world. It is unfortunate that the new leadership of the corporation have given the impression that the BBC's role of providing broadcasting excellence is to be subordinated to competing in the ratings chart and that the service is to be allowed to descend into populism as a result. That attitude is a betrayal of all those who have fought over the years to retain the BBC's reputation as the best.
There are other complaints too. There is resentment over certain people who work for the BBC who regard the corporation as their personal fiefdom. Because they have been around for so long, they arrogantly suppose that they are indispensable. It is time the BBC had a look at its long-term employees.
Access to programmes is too narrow and producers and editors are too prone to promoting the Government's agenda and pandering too much to the politically correct line on the issues of the day. There is also an ongoing complaint from members of the Eurorealist organisations that they do not get a fair hearing and that the BBC is not willing to have a deep and searching investigation into the European Union.
88
Above all, they are reluctant even to discuss the possibility and the consequences of withdrawal from the European Union.
That failure to discuss issues that are uppermost in the electorate's mind brings about the sort of upheavals that occurred in France yesterday. It is not only politicians who need to learn lessons from those events in France. The media need to learn lessons as well. The BBC has a great responsibility in that area and I hope that it will discharge it.
8 p.m.
Baroness Howe of Idlicote: My Lords, I thank the noble Baroness, Lady Anelay, for this opportunity to look briefly at the future, and future financing, of the BBC against the background of the forthcoming establishment of Ofcom. The central issue of the licence fee will undoubtedly continue to be debated, but I agree with the noble Lord, Lord Stoddart, that it is not really a great sum. It may be great for certain people, but it is relatively mild for most people's budgets.
I suspect that another matter underlying this debate is the extent to which the BBC should or should not be totally subsumed within the regulatory authority of Ofcom once it arrives. I start from a premise that many others have already mentioned—that it is still accepted in almost any conversation on public broadcasting in any public bar or around any dinner table that our broadcasting system remains one of the best and most independent in the world. I think that the pre-eminent reason for that is the unique role played by the BBC in establishing and maintaining the concept of public service broadcasting. One has only to look to the United States to see the alternative. There, public service broadcasting remains in both substance and style an under-resourced ghetto.
My central point is very simple. If we seek, for the sake of a completely comprehensive system, to harmonise the way in which we finance, run and regulate and at the same time absorb a standard-setting, world-respected institution which has served us so well for so long, we put at risk the future quality of British broadcasting. I accept that Ofcom will have a considerable role to play in regulating many aspects of the BBC, but that does not apply to all aspects. It is important for the corporation to retain real independence, and to continue its investment in quality digital programmes. It is the quality of digital programmes that will help persuade the audience to switch over to digital and meet the Government's hoped for target date.
I admit to being somewhat wary of "giantism"—the current passion, which has existed for some time, for all-embracing, comprehensive organisations. I do not want the BBC's creativity to be stifled by the giantism of Ofcom. My central message is that we must take care not to press the logic too far, whether it is the logic of how we fund the BBC or the logic of including all its activities within Ofcom. But there is an important corollary to that conclusion. There is still much to be done in improving the governance of the BBC.

89
That will be even more important under the "lighter regulatory" regime proposed for all broadcasters. So there is absolutely no room for complacency at Broadcasting House.
The new BBC chairman, to his credit, is plainly aware of that. His latest plans, for example, show a more hands-on role for governors in setting targets and monitoring the public interest in how the licence fee is spent. Again, however, I for one shall need to be more convinced—in the likely absence of something like the Broadcasting Standards Commission—about the independence of the corporation system in handling citizen complaints, whether about unfairness or violence. The BBC has pledged to involve outside, independent auditors when issues of potentially unfair competition arise. Would it not be splendid if an equally expert panel, which was also completely independent of the BBC, could be established to deal with unresolved complaints about unfairness or violence? That might also provide Ofcom with a model of the type of independence and transparency which I believe that it too will need if it is fully to comply with the European human rights legislation.
There is a final example. Despite the hugely competitive world of modern broadcasting, far less attention must be paid to ratings and far more to the range, diversity and, above all, quality of what is shown on BBC terrestrial channels. The ITC's latest annual report has rightly expressed serious and specific concern about "dumbing down". Although ITV bore the main brunt of the commission's justified criticism, the BBC was also shown to have cut both current affairs and arts programmes by up to 50 per cent.
I return to my main point. We must take care not to undermine the organisation which is the principal buttress of British broadcasting's generally high standards and reputation. As the noble Baroness, Lady Anelay, said, we need the BBC to continue as a benchmark. Although its future plans look slightly more encouraging, the BBC needs to know now more than ever that we expect results.
Lord Pearson of Rannoch: My Lords, I support my noble friend Lady Anelay in her prayer.
I start by reminding noble Lords of a debate in your Lordships' House on 11 th March 2002, at cols. 653 to 676 of the Official Report, when I accused the chairman and governors of the BBC of failing in their duty to produce political programmes which are impartial, wide ranging and fair and which reflect significant strands of British public thought. I imagine that it is common ground that those duties and the public service remit generally form an important justification for the licence fee and indeed for the BBC itself. The example that I gave your Lordships was of the BBC's biased treatment in favour of the United Kingdom's membership of the European Union, into which the noble Lords, Lord Harris of High Cross and Lord Stoddart of Swindon, and I–through the medium of our Global Britain research unit—had commissioned no fewer than six substantial independent surveys.
90
I shall not repeat any of that debate now except to recall that the Minister did not accept our case or our principal complaint that those analyses had been given to the BBC's management, who naturally dismissed them, and not to the governors, whose duty it was to consider them. However, the Minister was good enough to reveal that the BBC was addressing what she called the "perception" that the BBC's governors were too close to the BBC's management to regulate it properly.
This initiative was clarified the next day, 12th March, when the BBC's chairman revealed to a major broadcasting conference that he was setting up a new governance and accountability department to provide independent advice to the governors in fulfilling their public service priorities. Of course, by setting up such a new department and by rearranging the responsibilities and reporting lines of the existing Programme Complaints Unit and the existing Governors' Programme Complaints Unit, the chairman was in effect admitting that the governors had not been able to discharge their duties satisfactorily beforehand. That is the point that I had been trying to make; otherwise, why the change?
A few days later, an internal memorandum from the chairman fell into my hands, entitled a "Summary of changes to BBC governance arrangements". which sets out the chairman's proposed changes in greater detail. I do not know if the Minister has seen A., but I shall be happy to give her a copy after the debate and to put a copy in the Library of the House in case any other noble Lord is interested to read it. Nor do I know whether the BBC governors and management have agreed it. However, even if they have, it contains one fatal flaw which means that the changes it proposes, although welcome, will not be radical enough to make the governors sufficiently independent of management to allow them to fulfil their public service remit, at least in the areas of which I and others complain, and thus to justify even the present licence fee let alone the proposed increase.
The problem is that those employed in the new department and in the existing complaint units will merely be existing staff who continue to owe their prospects to the BBC's management. They are therefore most unlikely to be adequately critical of that management although the governors and the public service remit require them to be so. No man can serve two masters, and certainly not when one of there controls his salary, career and pension.
With that problem in mind, I had the temerity to write to the chairman of the BBC and to the Secretary of State on 23rd March with the suggestion that those who work in the new department should be employed by a separate trust funded by the licence fee but with impeccable trustees who would be entirely independent of management, which the governors are not. Such an arrangement would cost little because the salaries of those who are to work in the new department are already paid by the BBC. In the same letters I also suggested that the latest of our commissioned reports into the BBC's coverage of the "European issue" should not be passed yet again by

91
the chairman to the BBC's management for judgment, but to an independent arbiter. I have yet to hear from either the chairman or the Secretary of State as to what they think about those two suggestions and would be grateful to hear any views the Minister might have.
Finally, perhaps I may say a brief word about "dumbing down". I had the misfortune last week to put my back out and so decided to spend a good deal of time watching television on many of the channels which are now available and which I do not usually watch. I found it a deeply depressing experience as so much of the output seems to rely on sex and violence and so little on the nobler aspects of our existence. No doubt many of the new channels which are to become available will continue that regrettable and probably destructive trend. As far as I can see, there was as much of that stuff on the BBC as on any other channel.
If there is to be a BBC at all, and if there is to be a licence fee at all, I really cannot see why the BBC has to compete with that rubbish in the name of "ratings" or any other excuse. Surely the main point of the BBC's licence fee is precisely so that it does not have to peddle such ghastliness, so that it is free to educate and to lift our eyes and minds to higher things.
So, for once I agree with Mr Greg Dyke, the BBC's Director-General, if your Lordships will forgive me for repeating some of his language, that it is time for the BBC to "cut the crap". If it did that, it would not need anything like its present budget of some £2,500 million and would avoid becoming an expensive irrelevance. If it did that, it would also return to its former and rightful place in the affections of the British people.
8.15 p.m.
Lord Gordon of Strathblane: My Lords, apart from expressing gratitude to the noble Baroness, Lady Anelay, for raising the subject, and wishing that we had more time to debate it, as we shall in the not too distant future, I have three brief points to make. First, I endorse the comments of the noble Lord, Lord Hussey, from his vast experience at the BBC. Of the sources of finance available, the licence fee is by far the most preferable for the BBC. A grant by the Government would increase dependence on government and increase the risk of political interference. Advertising would, frankly, reduce the available income to both the BBC and ITV to a point at which neither could do the job properly. I believe that the licence fee is the best solution.
My next point is that the present level being proposed is about right. Like the noble Lord, Lord Lipsey, I was a member of the committee which considered that, so I would say that, wouldn't I? I disagree with my noble friend, as I did at the time, because the alternative was a separate digital licence fee which I felt would have inhibited the growth of digital television. I thought that it was more important to expand the number of people able to take up digital television and so have a licence fee which would be a little higher than it was. However, let us get that into
92
perspective. It is a quarter of what we pay Sky. Let us analyse also the contents. People talk about 200 or 300 channels as though they were all BBC1s, BBC2s or, indeed, ITVs. At least half of those are film channels, which is convenience video broadcasting. Some of the best channels are also re-runs. UK Gold is the BBC as we wish it still was. There is not a great deal of programme origination.
The proposed licence fee is about right. I do not think that it is coming bereft of the need for reform. Some of the reforms were put forward by the Davies committee and have already been adopted. Still others are in train. When the draft Bill on communications is before us I shall continue to argue that it will be much better for the BBC and for broadcasting as a whole if, like every other public service broadcaster, the BBC were regulated by Ofcom. But that issue is for another day.
The issue I want to single out tonight is that of the digital terrestrial platform. The noble Baroness was tragically accurate in her timing for this debate, with the announcement to which she alluded about ITV Digital. I have no sympathy for football clubs that pay their players too much money, or for ITV companies that pay too much money for sporting rights. From what I have heard, I believe that the Government are entirely right to say, "That is your problem. Do not expect us to intervene". However, I am concerned about the future of the digital terrestrial platform. It is important to remember that until about 10 years ago, the BBC and the IBA, the Independent Broadcasting Authority, owned the transmitters because we felt that they were too important to be left in the hands of private individuals, even television companies. Through them co-operating with each other we achieved 99.4 per cent coverage of the UK, including parts of the country which I come from which have beautiful scenery but are an engineering nightmare from the point of view of digital transmission.
Regrettably, in the early days of digital terrestrial, the BBC was not as co-operative as it might have been in helping to build the digital terrestrial network. It is important to recognise that the BBC was allowed to keep the proceeds of the sale by privatisation of its transmission network. It is entirely appropriate, particularly in the current, dare one say, crisis, that the BBC invests that money not in programming but in the platform. It is imperative that we have a digital terrestrial platform in this country. Unless we are careful, we may not.
Lord McNally: My Lords, I realise that by putting so many questions to the Minister, we may well run out of time for the answers and so shall lose some of the sparkling eloquence planned for tonight.
Needless to say, we on these Benches support the broad thrust of the settlement of which the regulations are a part. We thought it was a good idea during a period of change to give the BBC guaranteed adequate funding to carry out its remit both in terms of present channels and of making a proper commitment to the development of digital in this country. Therefore, we think it right that the regulations should pass. We

93
believe that the BBC should be encouraged to continue to explore all levels of technical development, which it is. The noble Baroness, Lady Anelay, asked what we are getting for our money. I believe that we are already seeing that in programme development, and that is sensible.
I want to make two brief points. The crisis in ITV Digital and some of the developments we are seeing in France, Germany, Italy and indeed in this country should make us pause before we think that the wonderful entrepreneurs always get it right. They can make catstrophically wrong decisions. We should not, therefore, put so precious an asset as our public broadcasting, system into pawn just at their say-so. Also, we should be well aware that many of our media owners have massive vested interests in the great gamble that is going on. Therefore, we should be cautious about how cross-media ownership is used. I refer only to the hysterical attacks by the Daily Mail on the BBC as a forewarning over the next few months that we may see many more like that. We should pause to think whether the publishers of certain newspapers also have massive broadcasting interests, which would benefit much by the weakening of the BBC. Apart from that, I look forward to the debates to come.
I share with the noble Baroness, Lady Howe, a suspicion that we should not buy a pig in a poke in putting the BBC fully in the control of a totally untried OFCOM. I welcome the healthy idea of a joint Select Committee to examine many of these issues. I welcome also the fact that the BBC is, as indicated by the noble Lord, Lord Lipsey, bringing efficiency into its own management. I agree with the noble Lord, Lord Gordon, that it is very important that we retain that digital platform, perhaps as a platform for free-to-air services and to spearhead the take up of the free-to-air services.
Today's debate has indicated that the noble Lord, Lord Pearson, will keep all his old prejudices and that there will be a wide variety of views in this House about the future of broadcasting. I hope that I have given the Minister the 10 minutes that are her due.
The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone): My Lords. I am enormously grateful to the noble Lord, Lord McNally, for cutting short his no doubt incredibly eloquent speech, but I am sure that we shall hear him on many other occasions on the subject. I am also grateful for what he and the noble Baroness, Lady Howe, said about the Government's intended arrangements with respect to the BBC and Ofcom. I share their views. I think that that is the right approach.
In the time available I shall not be able to respond to all the issues raised. I have listened carefully to all that the noble Baroness, Lady Anelay, and other noble Lords said.
The regulations which have prompted the debate are increased television licence fees in line with the funding formula for the years 2001 to 2006–07 which were announced by the Government in February 2000.
94
They also include consequential amendments in relation to the various instalment schemes for payment of the licence fee.
The funding formula was based on the recommendations of the independent review panel on the future funding of the BBC in its report of July 1999. It provides for television licence fee increases of 1.5 per cent above the rate of inflation as measured by the RPI. As the debate has made clear, many people have strong views about the BBC, both because it is our principal public service broadcaster and also because of the way it is funded.
The licence fee understandably raises high expectations among viewers and listeners. Those expectations relate to both the range and quality o r the services that the BBC provides, as well as how it manages its resources. But perhaps I may say to the noble Baroness, Lady Anelay, that I profoundly agree with what my noble friend. Lord Lipsey said. A huge debate took place at the time that the decision was made to increase the licence fee over this period by above the rate of inflation. The BBC's case for extra expenditure was gone into in great detail. As my noble friend said, "It was crawled all over".
I very much accept what the noble Lord. Lord Stoddart, and the noble Baroness, Lady Howe, said, that on the whole we get fairly good value for money in terms of what we have to pay for the licence fee. I accept the view expressed that this increase is not so enormous that most people cannot afford to pay it.
I turn to one or two specific questions. The noble Baroness said that it was intolerable that the Government should be taking so long to decide about BBC3. Any new BBC service should complement and challenge the market but it should not undermine it. My right honourable friend the Secretary of State is concerned about approving a bid to competitors, especially because many commercial companies, as stated in this debate, are feeling the squeeze from the biggest fall in advertising revenue for a decade.
The BBC and the ITC have different views regarding the market impact of BBC3. They are now working together to try to reconcile the position before the Secretary of State reaches her decision. I am afraid that I am not going to be able to tell my noble friend Lord Lipsey what the outcome will be.
My noble friend Lord Lipsey also commented on reducing overheads in the BBC. It is committed to putting more money into programme making. In 1999 the BBC spent 24 per cent of its income on overheads. It has set a target of reducing that to 15 per cent—a very substantial reduction—by 2004.
The noble Lord, Lord Blackwell, thought that the BBC should receive licence fee funding only for public service broadcasting and not where it competes or duplicates the commercial broadcasters. The Government remain committed to a BBC which provides a broad range of programmes catering for all viewers and listeners, as described by the noble Lord, Lord Hussey. The corporation's current broad remit cannot easily be divided without undermining its whole role. Public support for licence fee funding

95
would be unlikely to survive on a much more narrow remit limited to what the commercial sector will not provide.
The noble Baroness, Lady Anelay, asked about providing more information to consumers about digital television. The BBC is making substantial contributions to the provision of information in that area. Indeed, the commitment made by the Government to the BBC's new digital services last year was that it should take steps to promote more understanding of what digital services can provide.
The noble Baroness also asked about the estimated cost to the taxpayer next year of providing free licences to those over 75. The provisional out-turn for 2001–02 was £376 million, including administrative costs. I shall try to write at some later date with the forecast figure for 2002—03.
The noble Lord, Lord Hussey, made an eloquent speech in defence of the licence fee. He was supported by my noble friends Lord Gordon of Strathblane and Lord Lipsey. The noble Lord said that for all its weaknesses and limitations it was the best way for the BBC and its public service commitments to be funded. It protects the BBC's independence. It is a fundamental principle of our approach to broadcasting in this country that the Government do not intervene in detailed issues of programming content or scheduling. The system of funding should also support that.
I am about to run out of time. I want to make a couple more comments to my noble friends Lord Gordon and Lord Lipsey who took different positions on the issue of whether there should be a separate fee for digital services. The Government's position is that a digital licence supplement might well act as a disincentive to the take up of digital services and would certainly add to the cost of administering the licence systems. For that reason we have rejected it.
The noble Lord, Lord Hussey, made some comments about the role of the National Audit Office and the Public Accounts Committee, but the NAO in particular. Perhaps I can drop him a line on that matter and explain the Government's position. We did not accept the review panel's recommendation that the NAO should be given inspection rights to carry out periodic financial audits. But I shall follow that up in a letter.
The noble Lords, Lord Pearson of Rannoch and Lord Stoddart of Swindon, repeated their criticism about the quality of programming on the BBC. I do not accept their wide-ranging criticism—in particular, their allegations about its Europhile or other bias.
I should also like to respond to what the noble Baroness, Lady Howe, said about increased funding for some areas of the BBC that contribute to quality. To take arts and music programming, for example, during the next financial year there will be a substantial increase in funding for those areas, which I am sure that all noble Lords will welcome.
96
Again, I shall write to the noble Lord, Lord Pearson, about his points on governance. The letter that he sent to my right honourable friend the Secretary of State will of course be answered as soon as possible.
I hope that I have been able to reassure the House that the television licence fee increases introduced by the regulations are justified to ensure that the BBC can continue to provide its full range of services and maintain their quality. I therefore commend the regulations to the House.
Baroness Anelay of St Johns: My Lords, although there is no time limit on this debate, I hope that I managed to keep the blood pressure of the noble Lord, Lord Davies of Oldham, at a reasonable level before the debate began by saying that I would not take the usual opportunity to comment on the fascinating and penetrating comments made by noble Lords during the debate. However, as a courtesy, I thank them for their contribution to what has been an important opening salvo in our debates on the matter. I simply join the noble Baroness, Lady Howe, in saying that the BBC must know by now that we expect results. I beg to withdraw the motion.
Motion, by leave, withdrawn.

Proceeds of Crime Bill
8.32 p.m.
House again in Committee.
Clause 28 [Defendant convicted or committed]:
Baroness Buscombemoved Amendment No. 53:
Page 18, line 33, leave out "appropriate" and insert "just"
The noble Baroness said: In moving Amendment No. 53, I shall speak also to Amendments Nos. 54, 174 and 175. Under Clause 28, the prosecutor or the director of the assets recovery agency can still apply for a confiscation order after the defendant has been convicted if he absconds. The court can make such an order only if the prosecutor or the director applies to the Crown Court to proceed under the clause and the court believes it appropriate for it to do so. It is the word "appropriate" with which we take issue. It would be better for the court to proceed under the clause only if it were just rather than unjust to do so. A court will be more familiar with a test based on whether it is just or unjust to proceed under the clause rather than merely appropriate or inappropriate. I beg to move.
Lord Rooker: As the noble Baroness said, the effect of the amendments would be to make the power of the court to undertake confiscation proceedings against an absconder contingent on whether it were just to do so. We are satisfied that the word "appropriate" has the same meaning as the word "just" in the context in which it is used. It will always be appropriate for a court to exercise its discretion in a manner that is just. The effect sought by the amendments is therefore already achieved by the Bill, so the change is unnecessary. I hope that it meets the spirit of what the

97
noble Baroness seeks to say that, for our purposes, the two words are interchangeable. I therefore hope that she will not press the amendment.
Baroness Buscombe: I fear that I must take issue with the Minister. We do not believe that "appropriate" and "just" mean the same, either in law or in fact. One is more discretionary than the other. I should like to consider what the Minister has said. We beg to differ hut, for the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 28 agreed to.
Clause 29 [Defendant neither convicted nor acquitted]:
[Amendment No. 54 not moved.]
On Question, whether Clause 29 shall stand part of the Bill?
Lord Goodhart: I disagree that Clause 29 should stand part of the Bill, and shall also speak against Clause 184 standing part of the Bill. Clause 29 gives the court power to make a confiscation order where the defendant absconds after being charged with an offence but before he has been convicted. That is a dubious proposal. English law does not recognise trial in absentia. In special circumstances there is provision for, for example, removing a defendant from a trial at which he is being disruptive so that the trial continues in his absence, but as a principle, we do not recognise trial in absentia—whether or not that is caused by the defendant absconding.
Whatever may be the position with regard to a civil recovery order, it is plain that a confiscation order is a form of punishment—the Minister accurately described it as a penalty—following a criminal conviction. In Clause 29, the Government are imposing the penalty before the conviction. That is a case of "Sentence first—verdict afterwards"—literally, a Through the Looking-glass situation. It is also unnecessary. If there were no power to make a confiscation order where the defendant had absconded, the prosecution could do at least two things.
First, no doubt in such a case the prosecution would have obtained a restraint order. It could simply leave that restraint order outstanding. Assets are almost certain to be subject to a restraint order; if not, they will no doubt be long gone before the absconder can be brought back for trial. Secondly, the director or prosecutor could switch from seeking a confiscation order to seeking a civil recovery order under Part 5—where absence is not a bar to proceedings continuing.
Permitting the possibility of a confiscation order in a case in which there is no conviction contravenes a fundamental principle of English criminal law. The remedy provided by Clause 29 is therefore inappropriate and should be dropped, especially as alternative means of proceeding are available to achieve the same result.
98
Clause 184 applies the same provision to Northern Ireland. By some oversight, I failed to object to the corresponding clause for Scotland—Clause 115—but if we have to return to the matter, I shall certainly object to it as well.
Lord Rooker: The noble Lord, Lord Goodhart, has explained why he considers that the clause should not stand part of the Bill. At one point, I heard him say that it was a matter of fundamental principle. If it were, his argument would have some force. However, we are not inventing the wheel here. I shall explain why the clause should remain in the Bill.
The noble Lord's main argument is that Clause 29 deals with a situation in which a person has been neither convicted nor acquitted of an offence and that, even though the person has absconded, it ought not to be possible to make a confiscation order in his absence. The first point that I must make is that the provision was introduced in virtually the same form in the Criminal Justice Act 1993, although, at present, it applies in England and Wales only in drug trafficking cases. It was consolidated in Section 19 of the Drug Trafficking Act 1994. The key change made by the clause is to extend—not invent—the power to make a confiscation order in absentia against an absconding drug trafficker to cases involving those who have been charged with other crimes.
The justification for the power is the same as for Clause 28. We cannot think of any reason why a person who evades justice by absconding should be able to avoid having a confiscation order made against him. The fact that a person has escaped prior to his court case being heard must tell us something about that person. Nevertheless, there are, of course, numerous safeguards built into the procedures to ensure that they are fair. I would not be able to defend them were that not the case.
First, a confiscation order cannot be made until a period of two years has elapsed, starting on the date on which the court believes that the defendant absconded. That should knock out cases in which the defendant has absconded not because he is guilty., but for family or health reasons. Secondly—and exceptionally—any third parties who are affected by the confiscation order can make representations to the court. That recognises the fact that the defendant will not be present in court to provide information to the court about his realisable property. An absconder who returns to face proceedings will have an opportunity, if convicted, to challenge the size of the confiscation order under Clause 30. If he is acquitted, the order must, under Clause 31, be set aside. There is also the prospect of compensation under Clause 73—a wide provision—where an order is varied or negated.
I should also say that, by virtue of subsection (5)(d), the assumptions cannot apply to a case that falls to be considered under Clause 29. It might be argued, of course, that the absence of the assumptions from the clause rewards the defendant for absconding. However, the stronger argument is that the principle underlying the assumptions is to require the defendant personally to account for his wealth and to give him an

99
opportunity to rebut the assumptions. That will not be possible in absconder cases, and we believe that it is right that the assumptions should be disapplied in those circumstances. Furthermore, the effect of subsection (5)(e) is that a reconsideration of the defendant's benefit under Clause 22 is not possible while the defendant remains an absconder. The same principle would apply to Clauses 20 and 21, but it is not necessary to disapply those clauses. They apply only if the defendant has been convicted, which is not the case under Clause 29.
The noble Lord mentioned Part 5. There is the question of whether the clause is really necessary, given that civil recovery is possible under Part 5. However, the fact is that, under civil recovery, the authorities are required to prove the criminal derivation of the recovered property. In the case of criminal confiscation, the defendant's benefit is calculated. That is a different kind of exercise and a completely different procedure. A confiscation order may be enforced against any realisable property, legally or illegally obtained. There is a case for both schemes. Suitable provision has been made under Parts 2 and 5 to ensure that there is no double counting.
We consider that the clause serves a useful purpose and is a deterrent to those who may consider absconding before criminal proceedings are concluded. To forestall the obvious question from the noble Lord—"How many times has the power been used?"—I must say that, although it is on the statute book, it has never been used. However, the power must stay in the Bill because, if we were to remove it, there is an unacceptable risk that a major case might fail because their was no power to make a compensation order in cases in which the defendant had absconded.
I have stuck closely to a highly technical brief, and I hope that the noble Lord will take it on board that this is not a deviation from principle: it is an extension of an existing legal activity open to prosecuting authorities. It is already on the statute book.
8.45 p.m.
Lord Goodhart: It is obvious that it is a considerable extension of the existing law. I acknowledge that it is based on an existing statutory provision, but the Bill extends it from England and Wales to the rest of the United Kingdom. It also extends it from drug trafficking cases to a much larger swathe of offences.
The most important difference is that we now have the procedure for a civil recovery order under Part 5. In the case of somebody who flees abroad to avoid a charge and goes to a country where extradition is not available or where, for some reason, the extradition proceedings do not succeed, a civil recovery order will be applied for. Plainly, it is appropriate to treat someone who absconds abroad during criminal proceedings in the same way as someone who evades criminal proceedings by going abroad and going into hiding or successfully resisting extradition before the proceedings have formally started. The civil recovery
100
order is more appropriate than a procedure that would, in fact, apply a penalty before there had been a conviction. As the existing powers have not been used, there has been no chance to challenge their validity in the courts.
I am still concerned. We will carefully examine what the Minister said and may bring the matter back on Report.
Clause 29 agreed to.
Clauses 30 and 31 agreed to.
Clause 32 [Appeal by prosecutor or Director]:
Lord Goodhartmoved Amendment No. 55:
Page 21, line 15, after "order" insert ", the defendant may appeal to the Court of Appeal against the order and"
The noble Lord said: Clause 32 gives to the director or the prosecutor the power to appeal against a decision not to make a confiscation order or to appeal if an order is made but the director or prosecutor is unhappy with it—for instance, he might think that it does not go far enough or confiscate enough property. We do not object to that, but the Bill does not say that the defendant has a right of appeal against a confiscation order.
It would be completely wrong—and probably in breach of the Human Rights Act 1998—to deny the defendant a right of appeal against a confiscation order. Clause 32 does not say that the defendant has such a right. The Government may assume that the confiscation order is part of the sentence and could be covered by the ordinary right of appeal against it. However, the Government's general attitude is that a confiscation order is not part of the sentence, as is made clear, for example, in Clause 16 and Clause 7, which has now been removed from the Bill. There is a plain differentiation between the confiscation order and the sentence.
If that is right, if the confiscation order is not part of the sentence, are the Government satisfied that the defendant will have a right of appeal against the confiscation order on some other basis? If so, what? If not, what possible justification is there for refusing a right of appeal? If the Government really intend that there should be no right of appeal by the defendant, that is something which we would regard as completely unacceptable.
I await with some interest to hear the Minister's comments. I beg to move.
Lord Rooker: I am sure that I shall be able to satisfy the noble Lord, Lord Goodhart.
The amendments are based on a misunderstanding. The Bill already gives the defendant the right of appeal in question, as indeed the confiscation legislation always has done. I apologise for this incredibly large and complex Bill. But I draw the noble Lord's attention to Schedule 8, paragraphs 4 and 9, which amend the Criminal Appeal Act 1968 and the Criminal Appeal (Northern Ireland) Act 1980 respectively to make it clear that a confiscation order and a specified variation of a confiscation order fall to be treated as a sentence for appeal purposes. That has the effect of

101
creating a right of appeal against a confiscation disposal, which is separate from the right of appeal against sentence.
I appreciate that there has been little time for the noble Lord to read the Bill right through. I have just read it for myself and I believe that what I have said is correct; that is, that the right of appeal already exists, as it should.
Lord Goodhart: I am grateful to the Minister. All I can say is that, given the limited time I had to look through the Bill, I do not believe I can be faulted for not noticing something in Schedule 8 which is introduced by Clause 448 and is way distant from Part 2, which is what we are dealing with.
Be that as it may, I am pleased to hear that my concerns are unfounded and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 56 not moved.]
On Question, Whether Clause 32 shall stand part of the Bill?
Lord Kingsland: There are essentially two reasons why we oppose Clause 32 standing part of the Bill. The first is that promoted by the noble Lord, Lord Goodhart. I, like the noble Lord, had not spotted the provisions in Schedule 8 which answered the question that the noble Lord asked.
The second reason why we question whether Clause 32 should stand part of the Bill is, essentially, about the knock-on effect in Clauses 33 and 34. Clause 33 refers to the Court of Appeal's powers on appeal; and Clause 34 concerns a further appeal to the House of Lords.
Normally, appeals to the Court of Appeal concern points of law. Fresh evidence can only be adduced by the parties at this stage in very special circumstances. Yet if Members of the Committee glance at Clause 33(2), it will be seen that,
"On an appeal under section 32(2) the Court of Appeal may confirm the decision, or if it believes the decision was wrong it may …itself proceed under section 6 …or direct the Crown Court to proceed afresh under section 6".
That is an extensive power for the Court of Appeal to wield. It can essentially re-run the whole case, either under its own supervision or instruct the Crown Court to do the same.
Then over the page, in Clause 34, it will be seen again that an appeal lies from the Court of Appeal to the Judicial Committee of your Lordships' House; and the powers that that committee can wield in those circumstances are described under subsection (4) and are extensive. Clause 34(3) states:
"On an appeal from a decision of the Court of Appeal to confirm the decision of the Crown Court not to make a confiscation order or from a decision of the Court of Appeal to quash a confiscation order the House of Lords may …confirm the decision, or … direct the Crown Court to proceed afresh under section 6 if it believes the decision was wrong".
102
Subsection (5) states:
"In proceeding afresh in pursuance of this section the Crown Court must comply with any directions the House of Lords may make".
That means that the individual who is the subject of the confiscation order has to go through no less than three stages of first instance hearings with, as far as I can see, the prospect of having to face, at each level, fresh injections of evidence by the prosecution or by the director. I shall be interested to hear from the noble Lord the Minister the logic that lies behind those provisions and about the extent to which he thinks they conform with the European Convention on Human Rights. I beg to move.
Lord Rooker: It is with some surprise that we see the Opposition contesting this clause. I hope to be able to satisfy the noble Lord, Lord Kingsland, on this point.
It is true that Clause 32 does something quite new in the law of England and Wales and it will be of great benefit to the efficient operation of the legislation. For the first time it provides the authorities with a general right of appeal in confiscation proceedings.
The new right of appeal is available both where the Crown Court makes a confiscation order and where it does not do so, and it is wide enough to cover any decision of the court. The appeal is, of course, concerned with the decisions of the judge, not with the verdict of the jury or any matter underlying the conviction which preceded the confiscation hearing.
The purpose of this appeal is to deal with errors of law; for example, the sort of case where the court refuses to comply with a clear statutory requirement, not least the requirement to go through the confiscation procedures. Such instances are, regrettably, not unknown.
The appeal also covers factual mistakes such as adding up the benefit incorrectly or falling to take an item of property into account as realisable property which should be taken into account. The right of appeal is unlikely to be used frequently but we expect it to function as a valuable quality control mechanism in confiscation proceedings.
The change received widespread support in a consultation which we held in the spring of last year. Simply because the issue was raised by the noble Lord—I hope he does not come back on it but he is always free to do so—it is perhaps worth putting another couple of sentences on the record.
In a document, Criminal Justice:The Way Ahead,] published in February 2001, the Government proposed that the prosecution should have a right of appeal where, because of a judicial ruling, the trial has ended prematurely before the jury has been asked to consider its verdict. The Government also indicated that they would consider whether the prosecution should have an enhanced role in other proceedings, including appeals against sentence. In March last year, following a reference from the Home Office, the Law Commission made recommendations to enable the prosecution to appeal terminating judicial rulings, such as judge-directed acquittals. Sir Robin Auld

103
endorsed those proposals in his review of the criminal courts, which was published in October. We are currently considering the responses to his recommendations and will publish our proposals in a White Paper later this year.
People may believe that there is already a right of appeal against blatant errors of law—for example, judicial review—but that is not the case. Apart from cases subject to a preparatory hearing—fraud and complex and lengthy non-fraud cases—when there is a right of appeal against rulings on admissibility of evidence and points of law before the trial begins, there is no power for the prosecutor to appeal a decision of the Crown Court in a criminal case. In the case of an acquittal my noble and learned friend the Attorney-General has powers to seek the opinion of the Court of Appeal on a point of law but the court's opinion does not affect the outcome of the case in question. In the case of sentences, where my noble and learned friend considers that the sentence is unduly lenient he may apply to the Court of Appeal for it to be reviewed. However, as Members of the Committee will appreciate, that is limited to a very small number of specified offences. I believe that it is worth putting that on the record to assist the Committee.
As regards the European Convention on Human Rights, we are satisfied that the Bill complies with the ECHR. It has been signed by the Home Secretary and myself on advice. However, if the noble Lord wishes to elucidate now or in the future which aspects concern him I shall have the matter considered and report back.
9 p.m.
Lord Kingsland: I am obliged to the Minister for his reply. I should need a lot of convincing that it was appropriate to allow an appeal, on behalf of the prosecutor, from a direction to acquit in the Crown Court. I await with interest to see whether the Government come forward with a concrete legislative proposal to that effect.
I am most grateful to the Minister for his reply. I shall reflect on what he said. In my submission, it is an unprecedented set of powers for the Court of Appeal and the Judicial Committee of your Lordships' House to wield with respect to a single matter. I question the fairness of an individual being subject to essentially the same procedure on no fewer than three occasions.
I cannot point to any decision that the Court of Human Rights made with respect to such a situation because I cannot think of any other provision, either in United Kingdom law or the law of any continental country, which reflects what is in Clauses 32 to 34 of the Bill. I shall consider these exchanges and return to the matter on Report.
Clause 32 agreed to.
Clause 33 [Court's powers on appeal]: Lord Rooker moved Amendment No. 57:
Page 22, line 7. leave out paragraph (b).
On Question, amendment agreed to.
104
Clause 33, as amended, agreed to.
Clause 34 [Appeal to House of Lords]:
Lord Rookermoved Amendment No. 58:
Page 23, line 20, leave out paragraph (b).
On Question, amendment agreed to.
Clause 34, as amended, agreed to.
Clauses 35 to 40 agreed to.
Clause 41 [Conditions for exercise of powers]: Baroness Buscombe moved Amendment No. 59:
Page 27, line 12, leave out "Crown" and insert "High"
The noble Baroness said: The amendment seeks to ensure that unusually complex cases can still he heard in the High Court.
The removal of the High Court jurisdiction over restraint orders could, on one view, be seen as welcome. It would bring, as we believe that the Government intend, all confiscation and restraint matters into a single forum: that is, the criminal courts. It would end the anomaly of having to apply for civil legal aid in the context of criminal proceedings when one is faced with a restraint order for which criminal legal aid has been granted.
However, proprietary rights can be extremely complex, often involving several parties and a number of different jurisdictions. Previously restraint orders were considered sufficiently complex to require the expertise of the High Court jurisdiction and High Court judges more used to dealing with these matters.
We are of the view that the Crown Court may not be a suitable jurisdiction, particularly for some complex cases. Bringing the matter within the jurisdiction of the Crown Court should at the very least trigger a very high degree of training of Crown Court judges to deal with such matters. Alternatively, the Crown Court judge should be allowed to refer complex matters to the High Court or at least ensure—the amendment does not reflect this—that only High Court judges sitting in the Crown Court deal with restraint orders. This would be similar to the current provisions relating to the changing of the Crown Court trial venues which can be dealt with only in front of a High Court judge.
As the Bill is drafted, a complex matter could come before a newly qualified recorder who is required to deal with sophisticated financial orders which until now have been dealt with only by experienced High Court judges. I very much support what Mr Dominic Grieve, Member for Beaconsfield, said in another place when he sought reassurance from the Lord Chancellor's Department on the training programme envisaged and the resources available.
We are concerned that, as drafted, the proposal risks specialist work being spread too thinly. In that case there will be bad decisions by inexperienced judges leading to a plethora of appeals. We suggest, also, that there may be a reluctance by police prosecutors to expose themselves to legal areas with which they are unfamiliar. In addition, it could lead to inconsistency of decisions around the country, resulting from local areas following their own practice. The result stemming from that is adverse decisions preventing

105
deployment of the jurisdiction in that area. The proposal is inconsistent with the "centre of excellence" theory proposed by the Bill in relation to training investigators to remove the restraint and receivership work to local areas and Crown Court judges.
A further consideration is that there are no practice rules for the Crown Courts for civil proceedings. Even if there were rules, redrafted and created, it is completely contrary to the practice and experience of the Crown Court to administer a highly complex civil jurisdiction, produce detailed orders, keep a court file in the same sense as a civil court and allow inspection by parties of the court file. There are no qualified lawyers assisting Crown Court judges. That could have an adverse impact on Crown Court time and on its carrying out what it is supposed to do, which is to try criminal cases. Specialist civil work is heavy on preparation time and on time to prepare reserved judgments. To be effective I respectfully suggest that the work must be done by specialists.
At present there is no evidence that the High Court administers the work badly or inefficiently. Nor is there evidence of it having too much work to cope with. We believe that the contrary is true. In short, we are concerned that this proposal is counterproductive. I look forward to the Minister's response. I beg to move.
Lord Bassam of Brighton: An identical amendment was tabled and debated in another place on 29th November last year. On that occasion, we made clear that this fundamental change to the legislation is needed to ensure that confiscation is converted from an incidental disposal into one that is routinely used in criminal cases. Transferring restraint proceedings to the Crown Court was a specific recommendation of the report of the Performance and Innovation Unit on which the Bill is substantially based.
We remain of the view that the transfer of restraint from the High Court to the Crown Court is fully justified. Our starting point is the number of restraint orders currently made. As the PIU report pointed out, there were only 252 orders made in 1997 and 247 in 1998. Throughout Part 2 of the Bill the Government's aim is to increase the use of confiscation as a tool against acquisitive crime. Effective and early restraint is a critical element of that process. The ease and speed with which cash and assets can be concealed and transferred to the safety of foreign jurisdictions requires that assets must be frozen to prevent that happening.
The Government consider the transfer of the restraint function to the Crown Court to be unavoidable given the anticipated rapid growth in asset recovery proceedings in general. In our view, the Administrative Court would simply not be able to cope with the heavier workload. I remind the Committee that the Crown Office of the High Court is the only forum currently authorised to hear such cases. It numbers just 20 judges, who sit mainly in London and deal with a huge range of work and not just
106
restraint proceedings. It is vital that restraint orders are available routinely and at local level to support the greater number of confiscation cases that we envisage.
In short, as a recently:retired High Court judge put it in response to the consultation exercise on the published draft clauses for the Bill earlier this year,
"transferring the jurisdiction from the High Court to the Crown Court is likely to be beneficial".
It is true that restraint cases sometimes raise issues of the utmost complexity, but it is difficult to imagine an area of the law where that might not occasionally be the case. In our view, the large majority of restraint cases are likely to be routine. Contrary to what one may hear from some sources, restraint is not rocket science and we are confident that the Crown Court will be able to cope with it.
I remind the Committee that the Crown Court has been dealing with complex property issues for many years by virtue of its existing involvement in post-trial confiscation proceedings. Those proceedings can be extremely complex, but we have never heard it suggested that the Crown Court is unable to cope with them. In addition, as the PIU report pointed out, the increasing throughput of restraint cases will help to build up the Crown Court's expertise in that area. For those reasons I strongly oppose the amendment and invite the noble Baroness to withdraw it.
Baroness Buscombe: I thank the Minister for his response. I make no apology for the amendment being identical to one tabled in another place. We were not happy with the response in another place so we tabled it again in your Lordships' House.
We believe that this proposal is not practical and we do not believe that it will work for all the reasons that I suggested. It would be otiose of me to repeat them, but we shall consider carefully whether to return to the matter at Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Rookermoved Amendment No. 60:
Page 27, line 36, leave out from first "the" to end of line 37 and insert "relevant amount (as defined in that section)"
On Question, amendment agreed to. Lord Rooker moved Amendment No. 61:
Page 27, line 44, leave out from first "the" to end of line 45 and insert "relevant amount (as defined in that section)"
On Question, amendment agreed to.
Baroness Buscombemoved Amendment No. 62:
Page 28, line 14, at end insert—
"( ) any period of investigation exceeding 12 months will be presumed to constitute undue delay unless otherwise shown. A restraint order can be made for a maximum of 6 months and must be reviewed unless extended by written consent"
The noble Baroness said: The purpose of this amendment is to prevent property and funds of a suspect and third parties being frozen pre-charge for unnecessarily long periods. Allowing restraint orders

107
at the investigative stage will have an enormous impact on fraud trials, prior to which an investigation stage may have lasted for up to three or four years.
In that case is it being suggested that property may be restrained for the whole of that period? Clause 41(2) states that a restraint order may be made if,
"a criminal investigation has been started in England and Wales with regard to an offence, and there is reasonable cause to believe that the alleged offender has benefited from his criminal conduct".
One hopes that a court will be rigorous in requiring a high standard of information from the investigating agency, not the prosecuting body, since no charges will have been brought before making an order. However, experience suggests that this will not be the case and that a court will impose a restraint order, albeit on flimsy information impacting on someone's personal life; for example, an innocent third party trader whose stock is frozen during an investigation leading to him becoming bankrupt to an enormous extent and for many years, when theoretically no charges may be brought at all. Indeed, there may be Article 8 considerations in this regard.
It should also be noted that Clauses 48 to 53 deal with receivers. Again, the Bill distinguishes between management receivers appointed in relation to restraint orders and enforcement receivers who are appointed once a confiscation order has been made. These are appointed in the Crown Court and this highlights the necessity for a high degree of training for Crown Court judges. Many judges will have had no experience at all of these areas and `the potential for miscarriages of justice is alarming. I beg to move.
9.15 p.m.
Lord Goodhart: This group of amendments includes three amendments in our name. The first is Amendment No. 64. It is intended to achieve the same purpose as the amendment of the noble Baroness. We are agreed that we are concerned about this issue. We propose a slightly different solution, which is that when a restraint order is made it should be made for a period not exceeding 12 months. There would be power to make a further restraint order before the end of the 12 months. The purpose is to ensure that any restraint order is reviewed at yearly intervals.
It is quite clear that it would be wholly wrong for a restraint order to be imposed and then left while the prosecution dillies and dallies over the investigation or indeed the trial itself. That has been recognised by the Government in Clause 43(7), where it is stated that if,
"an investigation was started or an application was to be made, the court must discharge the order if within a reasonable time proceedings for the offence are not started or the application is not made".
We believe that the most effective way of ensuring that that result is achieved is by requiring any order to be reviewed by the court at intervals of not more than a year. That will clearly encourage the prosecution to keep moving and to make sure that it is not at risk of
108
having the restraint order thrown out. That measure is highly desirable and would not basically interfere with the process if work is carried on as it should be.
Lord Rooker: The noble Baroness referred to orders based on flimsy information and the noble Lord referred to the prosecution dillying and dallying. I put the case on behalf of Joe Public and not the criminal. I am not saying that they are supporting criminals because that is clearly not the case.
For some criminals, at the first sniff of an investigation the assets are out of the gate and up the road quicker than the investigator can take his notebook out of his pocket. That is why we need to be in at the beginning of the investigation. We are dealing here with serious criminals in the sense that they are people who can shift assets very, very quickly and with the speed of lightning sometimes. There will not be any dillying and dallying, but we need to restrain some criminals at the beginning of the investigation and not when charges are made. That is the nub of the issue.
It is always open to the defendant if he believes that the restraint order had continued for too long to return to court to have it lifted. That possibility is always open. The courts exercise discretion in any event in making restraint orders. They already refuse to extend them if they consider that there has been unreasonable delay.
I am sure that the orders will not be based on flimsy information. I can assure noble Lords that there will be no dillying and dallying. This power is necessary simply because of the way in which organised criminals, those to whom the Bill's provisions are directed, operate.
By definition, some of cases are extremely complicated. I am not saying that there is an excuse for the investigation to continue for years. If it did, the defendant would be likely to apply to the court and the judge would lift the restraint order. The provision is there as a stop on behalf of the defendant. We should be reluctant to change the present position. Noble Lords may wish to think about it, but I hope that they will withdraw their amendments.
Baroness Buscombe: I thank the Minister for his response and for his reassurance that what we suggest will not take place. We shall consider his remarks. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 41 agreed to.
Clause 42 [Restraint orders]:
[Amendments Nos. 63 and 64 not moved.]
Baroness Buscombemoved Amendment No. 65:
Page 28, line 31, leave out subsection (4).
The noble Baroness said: In moving this amendment, I shall speak also to Amendment No. 66A.
With regard to Amendment No. 65, the provisions of Clauses 41 and 42 combine to have the following effect. First, any person under investigation or against

109
whom proceedings have been started with regard to an offence, where there are reasonable grounds to believe that he has benefited from his criminal conduct, is liable to have a restraining order made in relation to all his realisable property regardless of the amount of potential benefit.
Secondly, a person who is under investigation but against whom proceedings have not been started may be permitted, by way of exception to the restraint order, to expend funds on reasonable legal expenses in relation to the offence or offences under investigation.
Thirdly, a person against whom proceedings have been started can in no circumstances apply for an exception to the restraint order as regards reasonable legal expenses in relation to those proceedings.
There is now available public funding for legal representation before proceedings have been started, which was no doubt the reason for permitting that exception to a restraint order in the Bill.
The Government have now acted to reduce publicly funded representation in criminal proceedings, in high cost cases by approximately 40 per cent from that which was regarded as reasonable by officials under the taxation system. The Bar Council's argument that the cuts have been too severe to ensure that representation in these cases will continue at an appropriate level have been rejected on the basis that the market will decide. The legal representatives under new, very high cost cases contract arrangements are accordingly not obliged to undertake the work unless a satisfactory agreement can be reached as to the work that will be paid for and the rate for it in advance of the work being done.
By preventing anyone charged from applying for access to restrained realisable property in relation to reasonable legal expenses in connection with the offence charge, the following practical consequences are likely to occur. First, a person under investigation who is then charged will often be forced into a change of representation as a result of the instructed representative not being prepared to undertake the work at the publicly funded work rates on offer. Thus, his choice and continuity of representative will be substantially removed.
Secondly, a person who is charged will have access only to those legal representatives who are prepared to carry out the work at publicly funded levels. This will restrict the choice and quality of representation substantially.
Thirdly, these restrictions apply regardless of how small the benefit may be in relation to the total realisable assets. Fourthly, the restrictions will create an entirely false market in legal representation in these cases whereby the Government dictate the only rate for the work, having introduced a new contracting system which depends on the representative's right to refuse the work for the contract "negotiation" to have any meaning.
If the real purpose behind the provisions is not total control by Government of all legal representation in these important cases, the answer surely lies in permitting reasonable—not unreasonable—legal
110
expenses to be met in all situations, as determined by the court. An amendment to delete Clause 42(4) would permit reasonable legal expenses in all circumstances, and thereby provide a reasonable choice of representative to the accused person.
The purpose of Amendment No. 66A is to ensure that any person affected by the making of a restraint order not only has the right but the means to apply for a variation. Currently public funding in the criminal courts is available only to the defendant when charges are brought. It is important to note that a large amount of publicity has surrounded the asset confiscation aspects of this legislation but the power of Crown Court judges to impose restraint orders at the beginning of an investigation on what may be only minor evidence has enormous significance. It may have far-reaching consequences for defendants and should be opposed on principle.
An order may also be made against third parties who would have no recourse to legal aid as the proceedings would be of a criminal nature. A third party would not be under investigation. It would clearly be unjust and unwarranted interference unless further consideration is given to the rights of third parties in that regard. No compensation would be due unless the investigator had been negligent, which is a high threshold test to meet.
It is also important to note that under Clause 43 an accredited financial investigator employed by the director of the assets recovery agency may apply for a restraint order. It is crucial that those officers are well trained and do not simply replicate the often shoddy methods by which investigators currently apply for search warrants, for example, on small amounts of information. I am not sure that I dare use the word "flimsy" again. Crown Court judges must be rigorous in testing the information given to them by either employees of the director of the assets recovery agency or by employees of other investigative agencies. I beg to move.
Lord Goodhart: We have tabled three amendments in the group. Of those, Amendment No. 66 would have exactly the same effect as Amendment No. 65, except that we want to remove subsection (5) as well. Subsection (5) would cease to have any meaning if subsection (4) were removed as it is consequential. We have also tabled Amendment No. 130 to remove the same provision in relation to Scotland and Amendment No. 184 in relation to Northern Ireland. We are therefore entirely at one with the noble Baroness.
I shall not repeat what she said but we agree with her entirely. There is no justification for removing the right of a defendant to use what at that stage is his own money. He will be deprived of it just as effectively if he uses it to pay for an expensive QC as if it were confiscated and went to the Government. There is the possibility that bogus expenses could be incurred. There are unfortunately some crooked solicitors who might arrange to overcharge their client and then hand back the money by some devious route. That could be controlled by ensuring that the expenses allowed are

111
reasonable, as is provided by Clause 42(3). We believe that to be inappropriate. The restriction should be removed so that the funds that are subject to a restraint order can be used to pay the reasonable legal expenses of the defendant, not only in relation to other matters but also in relation to the primary proceedings.
9.30 p.m.
Lord Bassam of Brighton: These matters were given a good thrashing around in another place. But our position remains unchanged: we are unable to accept the amendments, largely because they would make the Bill much less effective than is the case at present. We can see no good reason for doing so.
Essentially, the amendments would allow the courts to release restrained assets to pay for any legal expenses, including those of the defendant. They would, therefore, reverse one of the major changes that the Government have made to the restraint provisions in the Bill. As was explained in another place, the report of the Performance and Innovation Unit found that substantial sums that should be available for confiscation were being dissipated on unnecessary legal expenses. I suppose one could argue that the Government are moving to ensure and keep clean the money that might otherwise be paid to lawyers, protecting them from benefiting from potentially ill-gotten gains. That would be a laudable exercise on the part of the Government.
There is no suggestion that the Bill's removal of some of the powers of the court to release moneys for legal expenses will deprive defendants and other litigants of the right to be represented. Criminal and civil legal aid will be available to cover all proceedings under the Bill on the usual terms.
The only people who would benefit from the amendments would be defendants who wanted to reduce the amount available for confiscation—a point made by the noble Lord, Lord Goodhart—and the less scrupulous element of the legal profession, which, of course, is very small in number. I do not believe that the public would necessarily see the benefit. It is perhaps worth adding that Amendment No. 66A is entirely unnecessary. Schedule 8 to the Bill, which has been widely read by noble Lords, already amends the Access to Justice Act 1999 to make it crystal clear that civil public funding will be available, on the usual terms, to cover the situation. Having outlined those very good reasons, I hope that the noble Baroness will feel able to withdraw her amendment.
Baroness Buscombe: I thank the Minister for his response. However, I do not believe that he made specific reference to a point that I believe I made quite clearly. Given the proposed clause, a person under investigation who is then charged will often be forced into a change of representation. This is an important issue, and something that the Government should
112
carefully consider. A person who is charged will have access only to those legal representatives who are publicly funded—
Lord Bassam of Brighton: I am not quite sure what difference that would make. Perhaps the noble Baroness could assist me in that respect.
Baroness Buscombe: The difference is that such a person will have access only to those legal representatives who are prepared to carry out the work at publicly-funded levels. In that case, the person's choice of representation is diminished. The question is whether or not that is correct in principle. Indeed, is that just?
We believe that our proposal is sensible. As the noble Lord, Lord Goodhart, observed, we are talking about removing the right of the defendant to use his own money, which is something that would seem to be rather more sensible than turning to publicly-funded alternatives. It is a practical suggestion. We are disappointed that the Government have not changed their view since the debate took place in the other place. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 66 not moved.]
Clause 42 agreed to.
Clause 43 [Application, discharge and variation]:
[Amendment No. 66A not moved.]
Clause 43 agreed to.
Clause 44 [Appeal to Court of Appeal]:
Baroness Buscombemoved Amendment No. 67:
Page 29, line 38, leave out subsection I and insert—
"(1) The following can appeal against the court's decision on an application for a restraint order—

(a) the applicant, or

(b) any person affected by the decision,

and public funding will be available for any person appealing against a decision under (b)."
The noble Baroness said: The purpose of this amendment is to allow a right of appeal both by the investigator against a refusal to make a restraint order and also to the suspect and any third party to appeal against the making of an order, with the public funding that would enable them to do so.
Currently, the wording allows the investigator making the application a right of appeal only against the refusal to make an order. Clauses 44 and 45 deal with appeals from the Crown Court to the Court of Appeal and to the House of Lords. There is no general right of appeal under the Supreme Court Act 1981 from the Crown Court to the High Court. This legislation could create such a right.
However, it would not create a right to appeal against the making of a restraint order, merely against the refusal of a Crown Court to vary or discharge an order. There are clearly resource implications for Crown Courts in dealing with restraint orders. Indeed, there are also training implications which will cost time

113
and money. There are scheduling implications and, one might suggest, there are cultural implications in the sense that Crown Courts are wholly unused to dealing with property matters of the type which are in issue in restraint proceedings.
Although Crown Courts are used to dealing with confiscation, restraint is a wholly different matter, in particular in the light of the ability to apply for orders prior to the institution of proceedings. Up until now, Crown Courts have never been involved in criminal proceedings or property proceedings prior to a person being charged. We believe that it is therefore imperative that a suspect and third party rights are safeguarded. I beg to move.
Lord Goodhart: I strongly support this amendment and it is only through an oversight that I did not add my name to it. Frankly, it is ridiculous to have a situation where the person against whom an order is made cannot appeal directly against the restraint order. He can do so only by applying to discharge the order and then appealing against a refusal to discharge it. That achieves exactly the same result, but it does so by involving a wholly unnecessary intermediate process. It would be very much simpler if the person against whom the order is made had the right of a direct appeal against the making of the restraint order.
Lord Rooker: We do not think that these amendments are either necessary or desirable. As noble Lords have said, they would give persons other than the investigator or, for that matter, the prosecutor, a right of appeal against the court's refusal to make a restraint order.
The Bill has been drafted precisely to prevent that outcome. There is no error or failure here. We fail to see why a person other than the one who applied for a restraint order should have any need for a right of appeal against the refusal to make it.
A further effect of the amendment would be to require an appeal to the Court of Appeal to be lodged immediately. As we explained in the other place, the Bill expects individuals to apply to the Crown Court for a variation of the order first, and only then to appeal to the Court of Appeal. The report in Hansard of 29th November makes that clear. In fact, this is currently what happens in practice. As most restraint orders are made ex parte, the defendant and third parties will not have had a chance to be heard, so it makes sense that they should first apply to the Crown Court and then appeal against the decision of the Crown Court under Clause 44(2).
If the amendment were carried, the Court of Appeal's time would be wasted quite unnecessarily and there would be massive resource implications. I should also stress that public funding on the usual terms is already available for these applications, whether through criminal public funding in the case of the defendant or civil public funding as set out for other persons in the amendments to the Access to Justice Act 1999, which is affected by Schedule 8 to the Bill.
114
Having made those comments, I invite the noble Baroness to withdraw her amendment.
Baroness Buscombe: I thank the Minister for his full response which I shall consider carefully in Hansard. I shall also take this opportunity to read through Schedule 8 to the Bill.
However, on the face of it, my immediate response is that I cannot agree with the Minister, and I am grateful to the noble Lord, Lord Goodhart, for his support and clarity of approach to the rather nonsensical problem before us. I shall think about it further, but we may well return to the matter on Report. For now, however, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 44 agreed to.
Clauses 45 and 46 agreed to.
Lord Bassam of Brightonmoved Amendment No. 68:
After Clause 46, insert the following new clause—
"HEARSAY EVIDENCE
(1) Evidence must not be excluded in restraint proceedings on the ground that it is hearsay (of whatever degree).
(2) Sections 2 to 4 of the Civil Evidence Act 1995 (c. 38) apply in relation to restraint proceedings as those sections apply in relation to civil proceedings.
(3) Restraint proceedings are proceedings—

(a) for a restraint order;

(b) for the discharge or variation of a restraint order;

(c) on an appeal under section 44 or 45.

(4) Hearsay is a statement which is made otherwise than by a person while giving oral evidence in the proceedings and which is tendered as evidence of the matters stated.
(5) Nothing in this section affects the admissibility of evidence which is admissible apart from this section."
The noble Lord said: The amendment flows from the transfer of the restraint jurisdiction from the High Court to the Crown Court. Hearsay evidence is nowadays routinely admitted in civil proceedings. Restraint proceedings currently take place in the High Court and they, likewise, rely on hearsay evidence. This is important where the authorities need to get a restraint order at short notice. The prosecutor will ordinarily put in a witness statement referring to the sources which make him believe that the case is appropriate for restraint.
The procedures of the Crown Court, as a mainly criminal court by contrast, have far more stringent evidential rules. Now that restraint is to be based in the Crown Court, more stringent evidential rules could mean that hearsay evidence is not admissible. That would have a very serious effect on the conduct of the proceedings. The amendment puts it beyond doubt that the Crown Court, in dealing with any restraint matter, can accept hearsay evidence in the same way as the High Court.
I draw the Committee's attention to the safeguards in subsections (2), (3) and (4) of the clause. These apply Sections 2 to 4 of the Civil Evidence Act 1995 to the Crown Court in a restraint proceeding. Sections 2 to 4

115
of the 1995 Act apply three main safeguards to hearsay evidence. They provide for notice to be given of its proposed introduction; they provide that a person who has given hearsay evidence may be examined on it; and they give the court guidance as to the weight it should put on the evidence.
The amendment is technical but it amounts to a new clause. It is important because it bites on the practical operation of all future restraint cases. I beg to move.
Lord Goodhart: I have considered this matter very carefully. It is obvious that any introduction of hearsay evidence into criminal proceedings—and these are plainly criminal proceedings—where it was not available before is a matter that needs to be looked at very carefully. Nevertheless, having looked at the matter, I recognise that the introduction of hearsay evidence is solely in relation to restraint orders. It does not apply to the evidence on which the relevant conviction is based, nor does it apply to the evidence on the basis of which the confiscation order is obtained. In those circumstances I do not see any reason to object to the amendment.
On Question, amendment agreed to.
Clauses 47 to 67 agreed to.
Clause 68 [Applications and appeals]:
Lord Bassam of Brightonmoved Amendment No. 69:
Page 43, line 15, leave out "is authorised to do so by" and insert "falls within subsection (2A).
(2A) An accredited financial investigator falls within this subsection if he is one of the following or is authorised for the purposes of this section by one of the following—"
The noble Lord said: These are fine-tuning amendments. They tidy up Clauses 68 and 222, which set out the conditions under which an accredited financial investigator may apply for a restraint order.
116
The clauses as currently drafted have a rather odd effect—that is, that a senior accredited financial investigator may authorise another accredited financial investigator to apply for a restraint order but may not apply for one himself or herself. The amendments remove that anomaly. We do not like anomalies in your Lordships' House. I beg to move.
On Question, amendment agreed to.
Lord Bassam of Brightonmoved Amendments Nos. 70 to 72:
Page 43, line 18, leave out "or"
Page 43, line 25, leave out "is authorised as mentioned in subsection (2)" and insert "falls within subsection (2A)"
Page 43, line 33, leave out "is authorised as mentioned in subsection (2)" and insert "falls within subsection (2A)"
On Question, amendments agreed to.
Clause 68, as amended, agreed to.
Clause 69 agreed to.
Clause 70 [Committal by magistrates' court]:
[Amendments Nos. 73 to 75 not moved.]
Clause 70 agreed to.
Clause 71 agreed to.
Lord Grocott: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

National Heritage Bill [H.L.]
Returned from the Commons agreed to with a privilege amendment; the amendment was considered and agreed to.
House adjourned at thirteen minutes before ten o'clock.