HL Deb 22 July 2002 vol 638 cc46-7

9 After clause 10, insert the following new Clause—

"Compensation of creditors

  1. (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. 47
  2. (2) The court may require the enforcement authority to pay compensation to the applicant if it is satisfied that—
    1. (a) as a result of the making of the order the defendant is wholly or in part unable to repay the debt;
    2. (b) the debt was incurred for full consideration; and
    3. (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 Commons disagreed to this amendment for the following reason— 9A Because it would involve a charge on public funds, and the Commons do not offer any further Reason trusting that this Reason may be deemed sufficient.

Lord Falconer of Thoroton

My Lords, I beg to move that the House do not insist on their Amendment No. 9 to which the Commons have disagreed for their reason numbered 9A. I shall speak also to Amendments Nos. 47, 78 and 166, to which the Commons have disagreed for their reasons numbered 47A, 78A and 166A.

As specified in their reasons, Amendments Nos. 9, 47, 78 and 166 involve privilege in that they would involve a charge on public funds. The amendments would require the law enforcement authorities to pay the debts of unsecured creditors and such authorities are not presently resourced to meet such expenditure.

More specifically, the amendments would empower the courts to order the enforcement authorities to pay compensation to make up the amount of any debt the defendant was unable to repay because of the making of a confiscation order. On the face of it, the maximum possible cost of the amendments would be roughly the amount that is currently recovered under confiscation orders; that is, approximately £18 million a year.

It is theoretically possible, however, for a defendant to have larger debts than the value of the confiscation order made against him. It is also possible for these debts to be to several different people. All the different creditors could argue with equal validity that it was their own debt that was unpaid because of the confiscation order. The maximum cost of the amendments could therefore be higher than the maximum recovered annually under confiscation orders.

We do not know what debts defendants have, or the extent to which the availability of compensation would stimulate claims which cannot be made at present, so it is difficult to estimate accurately the financial effect of the amendments. But, as I have illustrated it could be considerable. I commend the Motion to the House.

Moved, That the House do not insist on their Amendment No. 9 to which the Commons have disagreed for their reason numbered 9A.—(Lord Falconer of Thoroton.)

On Question, Motion agreed to.

5.15 p.m.