Lords Sitting of 13 May 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 Rochester.

Middle East
Lord Steel of Aikwoodasked Her Majesty's Government:
What is their view on the situation in Israel/Palestine.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Amos): My Lords, the Government are gravely concerned about the situation in the Middle East. The ongoing cycle of violence has led to the deaths and injuries of too many Israelis and Palestinians and to deeper and deeper mistrust between the two communities. The priority now is to create a safer environment for Israelis and Palestinians to live in and then to move quickly to political negotiations.
Lord Steel of Aikwood: My Lords, while most of us feel automatic sympathy for a fellow democracy when her citizens are so torn apart by the terrible carnage of the suicide bombers, does the Minister agree that the most effective recruiting sergeant for those suicide bombers is the feeling of hopelessness among the Palestinian people? That has been brought about by the repressive policies of the Sharon government. Is that not likely to be exacerbated by yesterday's Likud executive vote against the very principle of a Palestinian state?
Baroness Amos: My Lords, there is a feeling of hopelessness and frustration on both sides. We have
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said a number of times in this House that there can be no military solution to the crisis. We continue to believe that and we will work with our partners to try to find the best possible solution.
With regard to the second question about the Likud executive put to me by the noble Lord, Lord Steel, obviously that decision was reached internally and related to Israeli politics. What it demonstrates is the complexity of the politics within Israel, but it is important for us to focus on the fact that solid international support has been expressed for a two-state solution in the form of the relevant UN Security Council resolutions.
Lord Hylton: My Lords, I am glad that the noble Baroness mentioned a two-state solution. Can she say whether her right honourable friend is considering recognising a Palestinian state now, rather than waiting for serious negotiations which do not look very much as though they are going to start?
Baroness Amos: My Lords, we continue to focus on achieving the UN Security Council resolutions. A number of those resolutions place responsibilities on both sides. We shall continue with political discussions and political dialogue, as well as working with our Arab colleagues—noble Lords will know that discussions have been held around the proposals which have been put forward by Crown Prince Abdullah. I believe that we are all agreed that what we have to do is to ensure that those discussions and the dialogue continue. That is because, as I said in my original Answer to the noble Lord, Lord Steel, we can see no military solution to this crisis.
Lord Howell of Guildford: My Lords, does the noble Baroness agree that, while the Likud vote against the idea of a Palestinian state is deplorable, inward-looking and utterly self-defeating, the best path to peace remains the idea of a regional conference put forward by Secretary of State Colin Powell? Can she assure us that, if we can reach the stage of that conference, Britain's experience, skills, strength and

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knowledge will have a proper voice in it? Our voice should not be lost in or submerged under a more general EU attitude which may not represent and reflect exactly what we have to contribute.
Baroness Amos: My Lords, we need to recognise the fact that a number of different discussions are ongoing and that a number of different proposals have been put forward with respect to next steps and a way forward. It is important to focus on the UN Security Council resolutions as well as to support the work being undertaken by our partners, including the proposal from the United States for an international conference. Noble Lords will also know that we continue to play an important role, both in terms of our role within the European Union—my right honourable friend the Foreign Secretary is today in Brussels for discussions with his European Union counterparts in the General Affairs Council—and in terms of our bilateral role, as it were. Noble Lords will be aware that we were instrumental in some of the events surrounding the situation in Bethlehem. We will play our role within the European Union, but we will also continue to play whatever role we can with the United States and others to try to ensure that a proper, negotiated political solution to this crisis is reached.
Lord Rea: My Lords, I think that my noble friend is probably aware that last week, with the assistance of our consul-general in East Jerusalem, I was able to visit the West Bank with a small group of international MPs and journalists. In Ramala I visited the DfID-supported health and development institution devoted to strengthening civil society—the central aim of DfID. Apart from the disgusting vandalism that had taken place, all the computers had been systematically destroyed with the hard drives taken out. That means that years of meticulous work has been lost.
Noble Lords: Question!
Lord Rea: Can my noble friend assure me that those computers will be replaced and the bill preferably sent to Israel, without reducing subsequent DfID funding to this and other projects in the West Bank?
Baroness Amos: My Lords, I was aware of that visit. We have highlighted our concerns about Israeli attacks on Palestinian infrastructure and it is important that we continue to do all that we can to support the reconstruction of infrastructure in the Palestinian Authority.
Lord Carlile of Berriew: My Lords, does the noble Baroness agree that it would be a mistake for the British Government to be deflected from their determined role to provide assistance in negotiations between the parties, which she has described, by the internal decisions of sometimes over-excitable political parties and organisations on both sides? Should we not just get on with the job of trying to achieve a settlement?
Baroness Amos: My Lords, I think I made it absolutely clear in my earlier answer that we shall
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focus on trying to find a political solution, working with our international partners. We should not get involved in internal Israeli politics.
Lord Pilkington of Oxenford: My Lords—
Lord Janner of Braunstone: My Lords—
The Lord Privy Seal (Lord Williams of Mostyn): My Lords, could we hear from the noble Lord, Lord Pilkington, first and then definitely from the noble Lord, Lord Janner?
Lord Pilkington of Oxenford: My Lords, do the Government agree that the essence of a true settlement is that the Arab states recognise the right of Israel to exist? As long as people say that Israel ought to be driven into the sea, there is no possibility of a settlement.
Baroness Amos: My Lords, we have made it clear that we want a two-state solution based on UN Security Council resolutions.
Lord Janner of Braunstone: My Lords, may I say to my noble friend—
Noble Lords: Question!
Lord Janner of Braunstone: My Lords, may I ask my noble friend whether she accepts how pleased I am that I gave way to the noble Lord who just spoke? I identify myself with almost everything that she said. Does she agree that the suicide bombing began before Sharon took office? Does she accept that if we are going to help towards making peace, as our Government are rightly doing, there have to be people with whom we can negotiate? Does she believe that Arafat's failure to curb the suicide bombing and the terrorism is because he cannot curb it or because he does not wish to do so? In either event, how can anyone negotiate with him?
Baroness Amos: My Lords, the UN Security Council resolutions have made it clear that there are responsibilities on both sides. We have to work with President Arafat, who has been legitimately elected by the Palestinians, and with Prime Minister Sharon. We shall continue to do that. A great responsibility lies on the shoulders of both men.

Ministry of Defence: Use of Consultants
2.45 p.m.
Lord Burnhamasked Her Majesty's Government:
What impact there has been on productivity in the Ministry of Defence, particularly in the department of Defence Logistics Organisation, following the ban on the use of external consultants required to achieve objectives.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach): My Lords, there is no ban on the use of external consultants either in the department as a whole or in the Defence Logistics Organisation. The MoD remains committed to achieving improvements in productivity through a variety of methods. This includes the use of consultants, where appropriate and cost-effective.
Lord Burnham: My Lords, is it not the case that there been some restriction in the use of consultants? Is not the use of consultants largely a method of transferring costs from one budget to another?
Lord Bach: My Lords, there has been no ban. Some tighter controls are being introduced. The noble Lord may be referring to that. There are long-standing rules relating to the employment of external consultants by the MoD, which require the development of a robust business case that has been subject some sort of cost-benefit analysis. There should also be an evaluation after the event to learn lessons and ensure that the use of consultants represented value for money for the taxpayer. There are and always will be circumstances in which it is sensible to obtain external assistance.
Lord Roper: My Lords, does the Minister accept that there can be considerable rationalisation savings in defence logistics by looking at European solutions? In the context of the European security and defence policy and the rapid reaction force, is the Ministry of Defence looking at ways in which those savings could be made?
Lord Bach: Yes, my Lords, we are always looking at ways in which savings can be made in logistics, as in every other area covered by the MoD. The noble Lord will know that the Defence Logistics Organisation was set up in April 2000, two years ago, by combining the three service logistic arms with the Defence Communication Services Agency under a single organisation. The strategic goal is to reduce its cost of outputs by 20 per cent by 2005–06. There are already some good news stories on logistics savings. For example, the rationalisation of the supply of general stores, such as tools, has already generated savings in the region of £120 million.
Lord Berkeley: My Lords, does my noble friend agree that, while consultants are sometimes very useful, their use can be self-perpetuating, as most reports seem to end with a recommendation that further work needs to be done?
Lord Bach: My Lords, my noble friend is right. We try to use consultants—or external assistance, which covers much more than consultants—as seldom as possible. However, sometimes one does not have within the department people who are able to provide, for value, the information needed from external sources.
Lord Vivian: My Lords, what progress has been made in further integrating defence procurement and
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defence logistics? What progress has been made in developing a more cost-efficient repair and maintenance process within the DLO?
Lord Bach: My Lords, we are constantly looking at the DPA and the DLO, both of which are recent inventions of the past three or four years, to see whether the relationship between them is satisfactory. We believe that on balance it is satisfactory at the moment. As I have said, the aim in setting up these organisations is to save on costs, to ensure that delays are as short as possible and to improve performance. Those are the basic tenets of smart acquisition. They refer to both the DPA and the DLO. We have no plans at present to bring those two organisations together. All our efforts are aimed at trying to reduce maintenance costs.
Lord Wallace of Saltaire: My Lords, perhaps I may press the Minister on the question of the international integration of logistics chains. In ISAF, for example, there are some 1,600 British troops, 1,000 Germans, 600 French and contingents from another nine EU member states. I was told recently by a Czech civil servant that the overwhelmingly largest cost of maintaining a Czech contingent in Kosovo was the separate logistics chain. What efforts are the British Government making to ensure that, in the vast majority of external operations in which we are now engaged and which are co-operative with other countries, we rationalise our logistics chain?
Lord Bach: My Lords, I can only repeat that we make every effort to ensure that costs, whether at home or abroad, are met and that ISAF's are lowered. ISAF is a unique force. In the period in which it has been successfully in existence—as I am sure the noble Lord will agree—we have done our best to ensure that the costs in terms of logistics, which can be extremely high, are brought down and rationalised with our international partners.

Scientific Research
2.51 p.m.
Lord Peyton of Yeovilasked Her Majesty's Government:
Whether the present arrangements for passing the results of government-sponsored scientific research to British industry are satisfactory.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, as well as increasing substantially the funds for basic research the Government have taken a number of major initiatives to encourage knowledge transfer. These include the University Challenge competition, Science Enterprise Challenge, the £140 million Higher Education Innovation Fund and a major extension of Faraday Partnerships.

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These initiatives are beginning to produce an exciting cultural change in our universities. In 1999–2000 there were 199 spin-offs from our universities compared with an average annual rate of just under 70 in the previous five years. But, working with industry, there is much more that we can do.
Lord Peyton of Yeovil: My Lords, rather unusually, I thank the Minister very warmly indeed for that encouraging and useful Answer. Is he aware of the need to press his colleagues to understand the importance of scientific research, the speed at which it goes and the value of its results? Will he particularly keep a weather eye on the Treasury, which has never yet been persuaded that you cannot tell the value of scientific research until you know its results, and that you are unlikely to know its results until the work has been done?
Lord Sainsbury of Turville: My Lords, I thank the noble Lord for his supplementary question. To receive compliments from him in circumstances where I normally receive the odd criticism about holes in the road is very welcome indeed. I take his point. This is an extremely important area. We are doing work in this area and, as I said, we can do much more. We have introduced the two R&D tax credits for large and small companies and, as part of the DTI review, we have set up a new innovation group to work very closely with industry to try to raise R&D and the rate of innovation. I continue to press with colleagues the importance of this subject. I believe that even the Treasury is now persuaded of its importance.
Baroness Warwick of Undercliffe: My Lords, I declare an interest as chief executive of Universities UK. Tomorrow, at the headquarters of HSBC, Universities UK launches a report which shows how much knowledge transfer takes place between universities and industry. Does my noble friend agree that the performance of UK universities in knowledge transfer compares well with that of their international competitors, particularly the United States? Does he further agree that, as helpful as recent investments of £100 million are in building up these links, more investment is needed through SR 2002 if that growth is to continue?
Lord Sainsbury of Turville: My Lords, I agree with my noble friend that, interestingly, our record on spinoff companies stands up very well in comparison with the situation in America. I produce these figures only because people are constantly saying that compared to America and MIT we do not have a good performance. If one compares the size of the two countries, UK universities do very well. We have one spin-off firm for every —8.6 million of research expenditure; Canadian universities in 1999 spun-off one firm from every £13.9 million of research expenditure; and in the US the ratio was one for every £53.1 million. So the story that British universities are not entrepreneurial is no longer true. In America,
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universities such as MIT have magnificent records, but that is not true of all universities. We shall continue to push for extra funds for both basic research and knowledge transfer as part of SR 2002. Whether or not we have persuaded the Treasury will become clear at that point.
Baroness Sharp of Guildford: My Lords, as the Minister and other noble Lords have indicated, the record of universities in this country has been extremely good. As much as 12.9 per cent of their research funding now comes from business as compared to 10.1 per cent in the US. This is a figure that many people do not know. However, in many countries universities have been at the core of highly dynamic regional clusters of development. One sees it in countries such as Spain, the United States with MIT, and in our country at Cambridge, which has spun-off a large number of small companies. Does the Minister believe that the initiatives taken by the Government are too top-down in that they come from the DTI? Is enough being done to link up with regional development agencies and to get the core support networks developing out of the universities to the local regions?
Lord Sainsbury of Turville: My Lords, on the contrary, all our action now is mainly to support clusters through the RDAs, which have been working very closely with clusters of hi-tech businesses, not only in Cambridge but in Oxford, Bristol, York and Manchester. This is not only about Cambridge. We operate mainly through the RDAs because this is a local activity. Over the past three years, £150 million has been given specifically to the RDAs to support incubators and working clusters.
Lord Tanlaw: My Lords, is the Minister happy with the percentage spent in R&D on hydrogen-based fuels to replace carbon-based fuels, particularly in the automotive industry?
Lord Sainsbury of Turville: My Lords, this is a very important question. The Chief Scientific Adviser has recently made a study of the energy research carried out across government. This has disclosed some areas where more research should be done, including the area of hydrogen research. That is one of the areas which I believe will receive more support in the future.
Lord Haskel: My Lords, is the money spent on transferring the results of government-sponsored research to business and industry in addition to the budget for basic science, or has it been at the expense of that budget?
Lord Sainsbury of Turville: My Lords, the money spent on knowledge transfer is in addition to the expenditure on basic science. We have increased enormously the budget for basic science in this country. It is now in the region of 10 per cent up in real terms on what it was when the Government came to

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power. If we are to have knowledge transfer it must be on the basis of a strong basic research base. It is interesting that a recent survey of universities revealed that most spin-off companies and knowledge transfer come from the world-class research universities. One would expect that kind of indication.
Lord Ezra: My Lords, as the chairman of a Faraday initiative I can testify to the increased efforts now being made to stimulate knowledge transfer from universities to industry. In terms of the amount of money put into civil research, has the gap which used to exist between this country and other major developed countries now been closed?
Lord Sainsbury of Turville: My Lords, there is a considerable way to go in terms of the amount of money—not only government research money but, more importantly, business research money—that is put into research. As I said, since coming to government, we have increased the basic science budget by 10 per cent in real terms, and that should be seen in relation to the 17 per cent real terms net decrease which occurred in the previous decade. Consequently, we still have a long way to go to catch up. As regards total expenditure, we are behind France and Germany, the two countries whose performance we would most like to be comparable with. Germany is ahead of us because German industry does much more R&D than we do, and France is ahead because the French Government do much more research than the British Government do. Either way, in making comparisons with those countries, we have to make certain that we treat each country's R&D expenditure as a percentage of GDP.
Earl Russell: My Lords, can the Minister continue the attempts, in which I believe him to be already engaged, to explain to Her Majesty's Treasury the distinction between government-sponsored research and government-controlled research? Is he aware of a report in the Independent on Sunday, on 5th May, that the Treasury is now attempting to approve the science councils' research budgets on a line-by-line basis? Does he agree that that is the ultimate proof that the Treasury regards public money as a form of barium meal? Does he agree that the results are about as appropriate as if we should transfer our economic forecasting to a committee of microbiologists?
Lord Sainsbury of Turville: My Lords, I think that one should always be rather careful about making statements based entirely on newspaper articles. In this case, however, I was concerned by the report. I therefore spoke to people at the Office of Science and Technology, who, in these circumstances, might be expected to be deeply concerned. They have had no discussions with the Treasury whatever, let alone on a line-by-line basis; they have simply submitted their application for funds under SR 2002. I think that, in this case if no other, the Treasury is utterly blameless.

Digital Television
3.2 p.m.
Lord McNallyasked Her Majesty's Government:
Within what time frame they expect the Independent Television Commission to make a decision on the future of the digital terrestrial television platform vacated by ITV Digital; and what opportunity there will be for parliamentary scrutiny of that decision.
Lord Davies of Oldham: My Lords, the Independent Television Commission is responsible for the award of the licences, under accelerated procedure. Potential applicants must submit to the ITC a confidential expression of interest by this Thursday, 16th May 2002, and their full applications by 30th May. The ITC will then publish the programme proposals of the applications and invite representations, which should be received by 6th June. The commission expects to announce the award of the licences on 13th June. The issue of parliamentary scrutiny will, of course, be a matter for the usual channels.
Lord McNally: My Lords, does the Minister agree that it is more important to get this decision right than to get it done quickly? Does he agree that, as sad as the demise of ITV Digital is, it offers us a wonderful opportunity to provide a free-to-air platform for the 40 per cent of viewers 'who have expressed no wish to purchase subscription digital television?
Lord Davies of Oldham: My Lords, the noble Lord is quite correct that it is important to get this decision right. However, we see no difficulties with regard to the procedure. We anticipate that interested parties—who have been aware of the difficulties of ITV Digital for some time—will get their applications in and that the ITC will be able to make the appropriate decision. As for the future, although we all recognise the importance of extending the opportunities for digital television, we see no reason why this present difficulty should last into the long term.
Lord Lipsey: My Lords, does my noble friend agree that the chances of any commercial television company taking over digital terrestrial are rather slim, and that the only companies that would take it over are companies that we would not want to get their hands on it? Will he therefore encourage the public service broadcasters—not only the BBC, but Channel 4, Channel 5 and ITV—to take it over themselves, in order to use it as a platform to provide digital television services that nearly everyone can afford?
Lord Davies of Oldham: My Lords, although my noble friend is very knowledgeable, on this occasion, I shall have to say to him, "Wait and see". The deadline for the submission of applications is in the very near future, and it is anticipated that appropriate bids for the licence will be submitted.
Lord Razzall: My Lords, does the Minister accept that the Government's policy of wanting analogue

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switch-off by 2010 is now in disarray? Does he accept that there is no possibility of that happening by 2010 unless the Government are prepared to dole out free set-top boxes to the 40 per cent of the population who do not want to purchase Mr Murdoch's service? If that is the case, has he persuaded the Treasury to release those amounts of resources?
Lord Davies of Oldham: My Lords, on the noble Lord's final point, I can assure him that I have not persuaded the Treasury to do that. Moreover, my efforts to that effect have not been extensive thus far. The obvious point is that the noble Lord is perhaps being overly pessimistic—2010 is still some years away. We should take joy from the fact that digital television has already been extended to a substantial proportion of the population. There would be no question of switching off the analogue signal until a vast majority of the population were able to receive digital.
Lord Naseby: My Lords, will the Minister respond to the question that was asked? Is the Government's analogue switch-off target of 2010 still firm policy or not?
Lord Davies of Oldham: My Lords, I thought that I had answered the question in a suitably positive manner, despite the fact that there has been a dismal representation from each of the two Benches opposite. The fact is that progress has been made on digital television. Given that the new licence will be awarded in the very near future, there is no reason at all why the Government should not continue to be optimistic about the rate at which people engage in digital television.
Baroness Howe of Idlicote: My Lords, in view of the problems faced by independent digital television and the fact that the quality of terrestrial digital television programmes is improving, and given that we are all aiming to reach the appropriate moment for switch-off, does the Minister agree that a relatively cheap set-top box which allowed access only to terrestrial digital television is one way of reaching that goal? People would see the improved quality and that might encourage a wider take-up of the service.
Lord Davies of Oldham: My Lords, I am grateful for the noble Baroness's constructive suggestion, and I know that she takes a very keen interest in these matters. However, I must insist on our present position. First, we must see the award of the new licence, and, secondly, we must see the rate at which the British public decide to take up digital television. As I said, the take-up rate has been very encouraging in the first three years in which the service has been available. A very substantial proportion of our population have taken up digital television. Although no one would deny that the current situation is a setback, that does not mean that we cannot recover from the setback to hit the timetable outlined earlier.

House of Lords Reform
3.8 p.m.
The Lord Chancellor (Lord Irvine of Lairg): With permission, my Lords, I should like to make a Statement on the Government's proposals for taking forward reform of the House of Lords.
The Government began the process of Lords reform with the removal of the great majority of the hereditary Peers, in 1999. We are committed to further reform of the House of Lords, to remove the remaining hereditary Peers and to provide Parliament with a modern, effective second Chamber.
We have listened carefully to the wide range of views expressed in the recent debates on Lords reform in both Houses of Parliament and to the responses to the White Paper. We have taken account of the report of the Public Administration Select Committee. We have also considered statements from all parties that this issue should be considered further by a Joint Committee of both Houses. I hope therefore that the way forward I am announcing today will be welcomed and supported on all sides of the House.
We have decided that, on this vital constitutional issue, which concerns not only the composition of the House of Lords but also the role of Parliament as a whole and the relations between the two Houses, it would be right to invite the two Houses to establish a Joint Committee, in the hope that we can forge the broadest possible parliamentary consensus on the way forward. We hope that the Houses will be able to proceed with the establishment of the Joint Committee as soon as possible. We have noted the recent joint statement of the two main opposition parties that such a Joint Committee would help reconcile differences and seek a principled consensus on the way forward. I therefore hope that we can look forward to their cooperation in setting up the Joint Committee as soon as possible and making a success of its work.
Reform of the second Chamber has implications for the future of Parliament as a whole, and in particular for the relations between the two Chambers. It is right that Parliament itself should record its views on the composition of the second Chamber. For this we believe that a Joint Committee alone is insufficient. We therefore intend to ask the Joint Committee, as the first phase of its work, to report on options for the composition and powers of the House of Lords once reform has been completed. This will define options for composition, to include a fully nominated and fully elected House, and intermediate options. Both Houses will then be asked to record their views on those options in free votes.
In the second phase of its work, on which the committee will report, it will define in greater detail the proposed composition, role and powers of the reformed second Chamber, taking account of the opinions expressed by the two Houses. It should also recommend the transitional strategy for transforming the existing House of Lords into its fully reformed state. This will be particularly important if the recommendation were to be for a significantly smaller

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House. The Government's intention would then be to bring forward legislation in the light of the report of the Joint Committee and the opinions of both Houses expressed in those free votes.
As both the Royal Commission chaired by the noble Lord. Lord Wakeham, and the Government's White Paper made clear, any proposals on the powers and composition of the House of Lords must flow from a clear understanding of its role and functions. The issues to be considered by the Joint Committee therefore will include: first, the role and authority intended for the second Chamber within the context of Parliament as a whole—there is, we believe, a consensus that its main role should continue to be as a revising, scrutinising and deliberative assembly with the power to delay but not to seek to veto legislation; secondly, the impact of that role and authority on the existing supremacy of the House of Commons and relations with the executive—there is, we believe, broad agreement that the Commons should retain its role as the pre-eminent Chamber and that the test for any government should continue to be whether it can command a majority in the House of Commons; thirdly, the composition and powers of the second Chamber best suited to give effect to the role and authority intended for that House. This consideration should include the implications of a House composed of more than one "class" of Member and also the experience and expertise which the House of Lords in its present form brings to its function as the revising Chamber.
It will also be necessary to consider the most appropriate and effective legal and constitutional means to give effect to any new parliamentary settlement, including any mechanisms required for resolving conflicts between the two Houses. In order to inform the Joint Committee's deliberations, the Government are today publishing the full results of the consultation on their White Paper. We received over 1,000 responses. The full analysis is now available in the Printed Paper Office and on the Lord Chancellor's Department website.
The Government have a major record of constitutional reform. Since 1997 we have created a Scottish Parliament and Assemblies for Wales and Northern Ireland. We have enacted the first House of Lords Act, the Human Rights Act and the Freedom of Information Act. We have given the Bank of England independence in the setting of interest rates. Last week the Deputy Prime Minister set out our plans to allow the creation of regional assemblies in those regions of England that vote for them. We have enhanced the role of the Select Committees, including my right honourable friend's announcement that he will be the first Prime Minister ever to appear before the Liaison Committee. In addition, we are modernising the working practices of both Chambers. Taken together, this is the most substantial programme of constitutional reform for over a century and will stand as one of this Government's historic achievements.
Today's announcement is another important step towards ensuring that reform of the House of Lords ranks alongside those achievements. We must not
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allow a repeat of past history in which reform has been delayed because those who wanted it could not agree and therefore left the field to those who opposed it.
Our objective is to secure a second Chamber that is broadly representative of the Britain of today, a Chamber which will complement the Commons by reinforcing Parliament's ability to conduct scrutiny and hold the executive to account and which will increase the respect of the public for Parliament. The way forward I have outlined puts responsibility in the hands of Parliament itself in free votes. I urge Members of all sides of the House to respond not as party politicians but as parliamentarians committed to a strong Parliament within a modern democracy.
My Lords, that concludes the Statement.
3.17 p.m.
Lord Strathclyde: My Lords, I begin by thanking the noble and learned Lord the Lord Chancellor for the Statement he has made.
The word "historic" is a much overused cliché in this House but on this occasion I can say that it was an historic Statement as it concerns the future of Parliament as a whole and it shows that the Government accept that reform of Parliament does not belong to one party alone. The Statement trusts Parliament and parliamentarians with the responsibility of finding the best way forward to strengthen this House and Parliament itself for the benefit of the country as a whole. That is something we on this side have long argued for and which we now clearly welcome.
No doubt some may be tempted to say, "If only the Government had taken this course before" as, indeed, the noble and learned Lord the Lord Chancellor wisely promised as long ago as 1997. But I think that 'we must now look to the future. It is not the time to dwell on the past or what was done in the past. Instead, I say to my noble friends that we should welcome the fact that today the Government have held out a constructive hand. On behalf of my party I assure the noble and learned Lord that we shall respond in the same constructive spirit to that gesture.
As the noble and learned Lord said, less than a fortnight ago the noble Baroness, Lady Williams of Crosby, and I made a joint appeal to the Government to abandon a single party approach and establish a Joint Committee. The fact that the Government have now agreed to do what we asked is a statesmanlike and sensible step and I am grateful for that. It would, I believe, have been a disaster to plough on into bitter parliamentary warfare over the reform scheme that was put forward at the end of last year. It would not have served the Government's objectives; it would not have served Parliament and it would not have served the country or the voters' priorities.
In welcoming the Joint Committee, which I hope will be established soon, I make it clear that my party's basic position is unchanged. To us it seems obvious and urgent that the authority of this House—for all its successes since 1999—and the authority of the other place both need to be strengthened in the face of the

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executive. We have put forward proposals that we believe would strengthen both Houses and we still hope that progress will be made towards them.
However, the purpose of the Joint Committee is to build consensus and reconcile differences, so far as is possible, and to open the way to lasting reform; it is not to enable sensible aspirations for reform to be sidelined or smothered.
Will the noble and learned Lord confirm that the committee will be large enough to include shades of opinion within parties and across parties? In the context of this House, will he assure us that there will be places for Cross-Bench Peers on that committee?
We look forward to early discussions on the composition and remit of the committee. However, will the noble and learned Lord also confirm that the Government's proposals, which we bitterly opposed when they were announced, to reduce the powers of this House have been shelved—and, I trust, shelved permanently?
If the Joint Committee has authority, vision and independence, today could be a very good day for this House and Parliament. The threat of legislation that would have weakened this House and Parliament has been lifted. The Government have shown themselves ready to listen to Parliament—they would gain infinitely from that, if only they were ready to do it more. As a result, we now have a once-and-for-all opportunity to grasp something that eluded us in 1911, 1968 and 1999—a chance to set this House on a secure and lasting footing, as a full partner with another place in upholding the ancient liberties of the British people. All of us on all sides have a high and solemn duty to participate with a will in that work. On this side of the House, we will assuredly do so.
I end by thanking the noble and learned Lord for turning the Government away from the sterile conflict that we were threatened with in December last year. The Statement, if it means anything, could mark an historic moment at which the steady diminution of Parliament at last began to be reversed. Let us hope that it will; if it does not, a rare and remarkable opportunity will have been squandered to the lasting detriment of us all.
3.22 p.m.
Baroness Williams of Crosby: My Lords, I, too, thank the noble and learned Lord the Lord Chancellor for his Statement. Moreover, I thank him and the Leader of the House of Commons for having piloted through the proposal in what we recognise were controversial and difficult times. We are very grateful for what we believe to be a very exciting and promising way forward.
We appreciate in particular the proposal for a Joint Committee. I am sure that the noble Lord, Lord Strathclyde, who has much to do with this matter, will not object if I mention the name of my predecessor, my noble friend Lord Rodgers of Quarry Bank, who persistently pressed in that direction as a way forward
16
for reform of your Lordships' House. Many noble Lords will, on this occasion, wish to appreciate his major contribution.
We on these Benches particularly welcome the use in the Statement of the phrase,
"the role of Parliament as a whole".
We have never sought in any way to compete with the pre-eminence of another place. We recognise that the considerable loss of respect for Parliament since the Second World War must be reversed. One way to do so is to consider the role of Parliament—the role of the House of Commons and the ways in which this House can complement the work of the House of Commons in the most constructive way.
It is incumbent on all of us in this House—on every single Member, not simply those in a particular party—to seize the opportunity that has been granted to us and to approach it as constructively as we can. We believe that the people of this country are looking to both Houses of Parliament to rise to the occasion and to come forward with constructive proposals for reform in a way that will make Parliament once again central to the whole constitutional structure of this country.
I have two questions for the noble and learned Lord the Lord Chancellor. The first concerns whether the composition and powers of the House and of another place will be taken side by side during the first stage, on strategy, and during the second stage, on tactics. There are innovative and exciting proposals concerning ways in which the powers of this House could be extended into areas that are not currently scrutinised by Parliament in any way. Will that be taken into account by the Joint Committee?
Secondly, will the Lord Chancellor bear in mind the need for at least a reasonable sense of the importance of moving ahead with this reform—if not urgency—when considering the size and balance of the proposed Joint Committee?
I do not wish to detain the House. In conclusion, the position of Parliament is the keystone of the constitutional arch in this country, and has been for centuries. We believe that it is time that that keystone was refurbished and brought up to date. We thank the Lord Chancellor and the Leader of the House of Commons for giving all of us the opportunity to create out of Parliament the institution that all of us would like it to be. For many parts of the world, it has become, over the years, a model of how democracy should be carried out.
3.26 p.m.
Lord Craig of Radley: My Lords—
The Lord Chancellor: My Lords, I am grateful to the—
Noble Lords: Cross Bench!
The Lord Chancellor: My Lords, I believe that the procedure of this House is invariable and that when the leaders of both parties respond to a Statement, the

17
maker of the Statement responds at the same time to those responses; thereafter, there is—noble Lords may correct me if I am wrong— minutes for questions from elsewhere in the House.
I am grateful to the noble Lord, Lord Strathclyde, and the noble Baroness, Lady Williams of Crosby, for their welcome to the Government's announcement. The noble Lord's comments were sweeter than those associated with bitter parliamentary warfare, which the noble Lord, in his most menacing—as well as his most engaging—manner announced is now happily avoided.
I accept that the noble Lord has been calling for a Joint Committee for some time. I also accept that the noble Baroness has often said in her speeches on this subject that reform of the House of Lords should not be considered separately from reform of Parliament as a whole, and that she, too, has called for a Joint Committee. It was right in this context that she should have mentioned the name of the noble Lord, Lord Rodgers of Quarry Bank.
The Government accept that neither the Wakeham commission nor our White Paper, which was based on it, produced consensus. Now, as part of our continuing effort to achieve consensus, the Government propose a Joint Committee in which parliamentarians of great experience will consider these hugely difficult issues with the benefit of all of the opinion and discussion that has gone before, and will fashion composition options on which free votes will be taken in both Houses.
I assure the noble Lord that the usual channels will discuss the size and balance of the Joint Committee. I agree with him that it must be large enough to include a broad range of opinion, that the Cross-Benchers should certainly be involved and that there should be early discussions between the usual channels on composition. There is no merit, as the noble Lord was good enough to say, in political point-scoring over what has gone before; nor, I hasten to say, has there been any from the noble Baroness or the noble Lord.
The intractability of House of Lords reform has been proved by failure, during virtually a whole century, to achieve progress until the 1999 Act removed about nine-tenths of the hereditary Peers. The noble Lord asked whether the White Paper was shelved. That is a reasonable question and is not point-scoring. The White Paper is not shelved; nor is the report of the Wakeham commission. Neither succeeded in achieving consensus on its own. Plainly, the Joint Committee will wish to consider both with great care. It is a matter for the Joint Committee whether it brings forward options for both Houses to consider that are based on, or which closely resemble, any of the Wakeham or White Paper proposals. We simply have to wait and see, and await the outcome of the free votes.
Finally, I mention that the noble Baroness has said many times that reform of the House of Lords should be seen in the context of wider issues relating to Parliament as a whole. She will therefore have welcomed the sections in the Statement that said that
18
reform of the second Chamber has implications for the future of Parliament as a whole and, in particular, for the relations between the two Chambers.
How fast it will be possible to proceed and how quickly the Joint Committee will proceed is of course a matter for it. But certainly it is the wish of the Government for the momentum to be maintained.
The noble Baroness asked very detailed questions about what the committee may consider in the context of specific powers of this House. She referred, in particular, to areas where there is currently no scrutiny on the part of this House. Although the committee will itself determine the issues which it wishes to consider within its remit, I believe that for the present it is sufficient to say that the passage in the Statement which says that the Joint Committee will be asked, as the first phase of its work, to report on options for the composition and powers of the House of Lords indicates that those issues will be very wide.
I hope that that covers all the major points raised by the noble Baroness and the noble Lord. I appreciate the general welcome that they have offered and the description of "statesmanlike" which they applied to this new way forward.
3.31 p.m.
Lord Craig of Radley: My Lords, I thank the noble and learned Lord the Lord Chancellor and apologise if I in any way got the arrangements wrong. On behalf of all Cross-Benchers, I welcome very much his indication that the Cross-Benchers will be represented on the Joint Committee. In that representation, I hope that it will be possible to take account of the numerical strength of the Cross-Benchers in your Lordships' House and the fact that the 2:2:1:1 formula does not necessarily guide us as well as it normally does when we come to a reform of this nature. I should also be grateful if the noble and learned Lord the Lord Chancellor could give some indication as to when terms of reference for the Joint Committee will be available.
The Lord Chancellor: As I have already indicated, the Government are sensitive to the interests of the Cross-Benchers, who are numerous. There is no doubt but that the usual channels will heed with care the representations from the Cross-Benchers about their inclusion in the Joint Committee. I anticipate that the usual channels will now proceed at a considerable pace to settle terms of reference. It will have been obvious to your Lordships that the Statement which I made was intended to, and did, herald the broad outlines of what the terms of reference should be. I do not doubt that they will be settled in that sense and, so far as concerns the Government, as soon as reasonably possible.
Lord Wakeham: My Lords, I believe that the noble and learned Lord the the Lord Chancellor is well aware that a Joint Select Committee would not have been my first choice in these matters. But I think that he is right to propose one in the circumstances in which we find ourselves. I shall be happy if the noble and learned Lord takes that as a welcome.

19
When the Joint Committee has considered matters and reported, I am afraid that ultimately we shall return to the question of the composition of this House. That is the only really difficult issue. I very much hope that that committee will take heed of three things that we said in our Royal Commission report. The first was that this House functions better if it is relatively free of political patronage. Secondly, the Members who serve here serve for a relatively long time. To us, that almost certainly meant that there should be no re-election. But, thirdly, that does not mean that the percentage that get here in that way need necessarily be the percentage that we recommended—indeed, in our report we recommended three percentages. Thus we had a degree of flexibility in relation to that matter. I hope that the Select Committee recognises the real value to the House of those principles.
The Lord Chancellor: My Lords, I have no doubt that the Select Committee will consider with care both the report of the commission led by the noble Lord, Lord Wakeham, and what is said in these exchanges this afternoon. As to any point of detail about what the future may hold and about what the Joint Committee may consider it right to recommend, I do not believe that I should express any specific views myself. The Government should not now be seen to be giving any particular steers to the Joint Committee, given that it is charged to define options for both Houses to vote on in free votes. In fact, I go further. I consider that for me to do so would be misinterpreted at a time when the Joint Committee and its membership are about to be determined.
The Lord Bishop of Rochester: My Lords, like everyone else, I welcome the proposal for a Joint Committee to carry forward the reform of this House. Do the Government accept that, if a Joint Committee is to do justice to the complexity of the challenges ahead, it will be best equipped to do so if it draws its membership from a broad spectrum within this House and that that should include, among others, someone from these Benches?
The Lord Chancellor: My Lords, I agree entirely with what has been said by the right reverend Prelate and by others. The Joint Committee should reflect a very broad spectrum. However, I shall not trespass into matters which are for the usual channels.
Lord Richard: My Lords, perhaps I may say how much I welcome the fact that the Government now seem to have—I use a neutral phrase—moved away from the proposals in the White Paper. Whether it is still alive and has any breath left in it is perhaps a matter for intricate discussion. But, first, so far as concerns these proposals, I believe that one should broadly give them a welcome.
Secondly, is my noble and learned friend aware that I also welcome the fact that he sees this next procedure as keeping up the momentum for reform? There are
20
two ways in which it could be presented: either as keeping up the momentum for reform or as kicking the proposals into the long grass. I have to say to my noble and learned friend—I am sure he is not aware of it—that, indeed, there has already been some briefing to the effect that this is designed to kick the matter into touch, or whatever other sporting metaphor one wishes to employ. I am very grateful for my noble and learned friend's confirmation that that is not the Government's intention.
Thirdly, if one is going to keep up the momentum, then these matters have to take place within a reasonably brisk measure of time. Is it the Government's intention that the options vote, if I may call it that, should take place before the Summer Recess, if at all possible, or do they intend that it should take a little longer? To me, as a naive and mere Back-Bench Member of this House, the analogy with the hunting Bill does not seem to be all that pleasant. But, broadly, I believe that the House should welcome these proposals as a firm step in the direction that most of us wish to go.
The Lord Chancellor: My Lords, I am delighted that my noble friend abandoned the cynicism with which he began and that he ended on a note of optimism, which was well judged. This is not kicking the matter into the long grass; the momentum will be maintained. However, I am not willing to be drawn into saying anything which trespasses either on the functions of the usual channels or, more importantly, on those of the Joint Committee. It is inconsistent to praise the width of the remit proposed to the Joint Committee and, at the same time, imply that it must report the day before yesterday. That is certainly an issue for the Joint Committee. The speed with which it comes forward with its proposals will be a matter for the Joint Committee, but I am sure that it will do so with all deliberate speed commensurate with the huge importance of the subject matter for the future of Parliament as a whole.
Lord Naseby: My Lords, when the Lord Chancellor uses the phrase "the Britain of today", is he excluding Northern Ireland and therefore the United Kingdom? Is he also saying that the Joint Committee will consider the composition of the other place in addition to the composition of your Lordships' House?
The Lord Chancellor: My Lords, I do not exclude Northern Ireland and the Joint Committee will not consider the composition of the other place.
Baroness Boothroyd: My Lords, I give a warm welcome to the Lord Chancellor's Statement. I shall resist asking a number of detailed questions, which would not be appropriate at this time. However, the Lord Chancellor said that the Government do not intend to give a particular steer to the committee. Do I take it that the committee will be allowed to determine its chairman and that the chairman will not come from government sources?
The Lord Chancellor: My Lords, that is not a matter upon which any decisions have, as yet, been reached.

21
There will be discussions between the usual channels with a view to agreeing a chairman. I am not sure whether the noble Baroness was making a job application!
Lord Carlile of Berriew: My Lords, can I tempt the Lord Chancellor to be a little more specific about what he expects to be the remit of the Joint Committee? The effective legislative powers of this House depend upon the effectiveness of the legislative arrangements of the House of Commons. Does he expect the committee to be able to examine the legislative arrangements in the House of Commons and make reform of this House conditional upon improvement to those arrangements?
The Lord Chancellor: My Lords, that is a matter on which I shall not be drawn. The terms of reference of the committee have yet to be settled. Their broad outlines have been heralded by the Statement. Thereafter, it will be for the Joint Committee to interpret its remit.
Baroness Ramsay of Cartvale: My Lords, I welcome the Statement as it lays out a method of taking forward the whole process of reform, which all noble Lords want. Does my noble and learned friend agree that the resolution of differences and conflict between the two Houses is as important an issue to be addressed and resolved as the discussion of the composition of the reformed House?
The Lord Chancellor: My Lords, that is certainly so. The Statement itself in terms said that the Joint Committee would have to consider the most effective mechanisms—I paraphrase—for resolving conflicts between both Houses. I believe that the noble Baroness makes an important point. The Government have always stated that no single party should have an overall majority in the reformed House. That means that the government of the day will always be in the minority in this House and, therefore, liable to be defeated at any time. So mechanisms for resolving conflicts between the Houses are critical and that is why the Statement highlighted that the Joint Committee should give express consideration to that issue.
Earl Russell: My Lords, following the point made by the noble Baroness, Lady Ramsay of Cartvale, is the noble and learned Lord aware that the device of a Joint Committee, to which he has had such fruitful recourse, has been used in past centuries for resolving deadlock on the content of Bills? Is that a precedent worthy of re-examination?
The Lord Chancellor: My Lords, in my view a Joint Committee on the subject of House of Lords reform is a sufficient precedent in itself.
Lord Howe of Aberavon: My Lords, does the noble and learned Lord recognise that when his noble friend Lord Richard and I talk about momentum, we may
22
have slightly different views about pace and direction? I endorse the wisdom of his choice of words from the United States Supreme Court that the process of examination should be undertaken with all deliberate speed. But does he consider that change should occur at a pace that does not put at risk the qualities that this House values so highly?
The Lord Chancellor: My Lords, although this is essentially a matter for the Joint Committee, I agree that it must proceed with all deliberate speed, but commensurate with the gravity of the subject matter that it addresses. As to the second point raised by the noble and learned Lord, I believe that he lures me into the merits much further down the line.
Lord Dubs: My Lords, I welcome my noble and learned friend's Statement, which has been greeted with universal enthusiasm. While I fully understand why he does not believe that it is proper for the Government to seek to influence the detailed deliberations of the Joint Committee, does he agree that the first task for the Select Committee, of preparing a list of options—something that most noble Lords could accomplish by this evening—is one that could be achieved fairly quickly? Will he therefore use his influence to suggest that that stage of the committee's work could be carried out expeditiously so that a vote of both Houses could take place before the Summer Recess?
The Lord Chancellor: My Lords, I am reminded of what the noble Lord, Lord McNally, said on the final Question at Question Time, that it is more important to get things right than to proceed too quickly. With respect to my noble friend, when one considers the history of this House and the colossal difficulty of securing consensus, it is somewhat unrealistic to agree on a Joint Committee and then to crack the whip, to be prescriptive and to say that it is very easy. I prefer to trust the Joint Committee.
Lord Steel of Aikwood: My Lords, in considering the future composition of this House, will it be within the terms of reference of a Joint Committee to look at the three years' experience of the Scottish Parliament and the Welsh and Northern Ireland Assemblies? Will it also be able to consider whether there should be more formal links between those assemblies and this House, given that, by pure coincidence, the Presiding Officers of the three assemblies are Members of this place? There is no guarantee that our successors will be likewise beneficially endowed.
The Lord Chancellor: My Lords, the thrust of that question is in sharp contrast to the thrust of the previous question, which was to get on with it the day before yesterday. The thrust of this question is that it would be of advantage to the Joint Committee to consider the practices of the Scottish Parliament and the other Assemblies. That is a matter for the Joint Committee within its terms of reference.
Lord Stoddart of Swindon: My Lords, I congratulate the Government on taking a statesmanlike and

23
welcome decision to set up the Joint Committee. I have two questions. First, does the view that the House of Commons should be pre-eminent put a constraint on the Joint Committee in considering powers, particularly if the Joint Committee wishes to recommend that this House should be wholly elected? Secondly, will the terms of reference be wide enough—I do not imagine that this point will be popular with the House—to enable the Joint Committee to consider whether there is a case for a unicameral system?
The Lord Chancellor: My Lords, the Statement said that it is generally accepted, and I believe it to be so, that the House of Commons is the pre-eminent Chamber which should always ultimately have its way. However, I repeat that the Joint Committee is inhibited in its consideration only by its terms of reference, which will be settled by the usual channels in the light of the Statement I have made
Lord Haskel: My Lords, is my noble and learned friend aware that I welcome a free vote on the composition of both Houses? Does he agree that the view of both Houses on the composition of a reformed House, as expressed in a vote, would have to carry a lot more weight than the responses to the consultation to the White Paper?
The Lord Chancellor: My Lords, that is a nice question! In one sense, yes. However, proper weight must be given to the responses to the consultation. Obviously the Joint Committee will wish to do that, though it must be said—the question may have implied this—that those who responded to the consultation were self-selecting. It is also the fact that they are fewer in number than the total membership of both Houses. I imagine that Members of both Houses will not only be entitled but will also be interested to vote in free votes on issues critical to the nature and future of Parliament. It is for that reason that we have put responsibility in the hands of Parliament on free votes.

Proceeds of Crime Bill
3.51 p.m.
The Minister of State, Home Office, (Lord Rooker): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Rooker.)
On Question, Motion agreed to.
House in Committee accordingly.
[THE CHAIRMAN OF COMMITTEES in the Chair.]
Clause 72 [Serious default]:
Lord Kingslandmoved Amendment No. 76:
Page 45, line 32, leave out "serious" and insert "negligent"
24
The noble Lord said: Under Clause 72 of the Bill compensation is payable to the defendant who has suffered loss in consequence of a confiscation order, a restraint order, the appointment of a receiver or other orders under Part 2 of the Bill. However, before a defendant is entitled to compensation, he or she must show that proceedings were never brought, or he was not convicted of an offence, or his conviction was quashed, or that he was pardoned.
In all those circumstances any confiscation or other order made will be discharged. The defendant's loss may be modest or substantial. It could be that, as a result of the restraint order, he was unable to continue his lawful business; indeed, he may have lost that business as a result, and that loss could have been substantial.
It is right and proper, therefore, that any person suffering such loss, in such circumstances, should be entitled to compensation. However, before being entitled to compensation, that innocent defendant must prove that there has been a serious default by a member of the police force, the CPS, the Serious Fraud Office, a customs officer or an officer of the Commission of the Inland Revenue. A mere mistake is not sufficient. A careless mistake is not sufficient. Only a serious default gives rise to compensation, however disastrous the consequences for the innocent party.
That cannot be right. The powers given to the police force, the CPS, the Serious Fraud Office, a customs officer or an officer of the Commission of the Inland Revenue can ruin people. Those powers can be exercised even when no proceedings are ever brought. The courts are given little discretion in the matter and in some circumstances must make the order where the prosecutor requests.
We believe that, where there are such powers, there must also be accountability on behalf of the public authority; the two go hand in glove. If a member of the prosecution team makes a careless mistake, we do not believe that the innocent defendant should bear any loss as a consequence.
In short, it is important that those who have those powers exercise them as carefully as they can, and that those who supervise them ensure that they do so. If they fail then compensation should be payable. We suggest therefore that compensation should be payable in cases of negligent default and not just serious default. I beg to move.
Lord Goodhart: I speak to Clause 72 stand part, Amendment No. 77, Clause 142 stand part, Amendment No. 134, Clause 226 stand part and Amendment No. 193. Those are all in the same form respectively as regards England and Wales, Scotland and Northern Ireland.
We support Amendment No. 76, but we go somewhat further. We suggest that where property is subject to a restraint order then compensation should be paid, whether or not there is negligence, if the order is ultimately refused. The position in ordinary civil proceedings is that, where one party is entitled to or obtains an order from the court to freeze the property

25
of another—normally known as a Mareva injunction—the making of the injunction is conditional upon the party who seeks the injunction giving a cross-undertaking in damages; that is, an undertaking to compensate any other party for any loss suffered as a result of the making of the order.
We believe that that is the right principle and that there is no justification for the Government observing a lower standard of compensation than would be the case in ordinary civil proceedings between private parties. We believe therefore that the appropriate course, where the restraint order is made but is discharged and not replaced by a confiscation order, is for compensation to be paid for the loss which is suffered.
The Government are exercising considerable powers. The power to freeze somebody's property, as the noble Lord, Lord Kingsland, said, is one that may cause serious loss. It should therefore be the automatic result that if the order is discharged, compensation is paid. I accept, as would be the case in civil proceedings, that compensation may not be ordered in the exceptional case where the party against whom the order is made has in some way acted so as to cause suspicion and in effect to bring the order on himself. Subject to that there should be an automatic right to compensation.
Lord Rooker: The two groups of amendments spoken to by the noble Lords, Lord Kingsland and Lord Goodhart, essentially deal with the same part of the Bill but would have a considerably different effect. That is probably recognised in the brief speeches that we have just heard.
The effect of the first group of amendments—Amendments Nos. 76, 132, 133, 191 and 192—would be to make compensation payable where there was negligent default on the part of the enforcement authorities in the investigation or prosecution of an offence, and a loss had been occasioned. The effect of the second group, spoken to by the noble Lord, Lord Goodhart, would he to make compensation whenever a restraint order is discharged without a confiscation order being made, no matter why the confiscation order was not subsequently made. It may be useful for the Committee to appreciate that the provisions were debated substantively in the other place, as recorded in Hansard of 29th November at columns 411 to 426.
I turn to the first set of amendments. The Bill as drafted provides that compensation is payable where there is a serious default. The provision is settled and the Bill reflects existing legislation in that respect. There is nothing new about it. The word "negligent" is broader than the word "serious". The amendments would extend the conditions in which compensation was payable from those where one of the enforcement authorities committed a serious default to those in which the authorities committed any negligent act. Clause 72 uses the word "serious" rather than the word "negligent" because the enforcement authorities must not feel unnecessarily inhibited in the exercise of their duties.
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As the Explanatory Notes point out. the restriction to serious default cases is based on the principle that the restraint and realisation of the property is ancillary to a criminal trial—in the same way as is the detention of a person pending trial. In neither case is compensation paid on acquittal as a matter of course. Many years ago, I remember raising the case of one of my constituents who served his term of imprisonment and had been released before he got his conviction and sentence quashed. He was a former police officer, so it was a highly contentious case, but he could not get a penny from the Home Office. I fear that that is the way of the world.
It is reasonable to make statutory provision for compensation where there is a serious matter, such as the fabrication of evidence, but it would be wrong to hang a compensation scheme around the necks of enforcement authorities for genuine mistakes made in the exercise of their duties. Where the investigating and prosecuting authorities have made mistakes leading to the making of a restraint order, it will be open to those affected to sue them for negligence in the civil courts. In deciding whether or not those authorities owe a duty of care, the courts will take into account the relevant public interest in ensuring that crime is investigated and prosecuted. That is our starting point.
The amendments would discourage the investigation and prosecution of crime and ultimately ensure that more criminals were left to hold onto their assets. We therefore find their wording unsatisfactory and I hope that Members of the Committee will not press them.
As I explained, the second set of amendments would give the courts power to award compensation in any circumstances where property is restrained but no confiscation order subsequently made. They would not provide the courts with any criteria as to how they should apply their power to award compensation. That would be completely unacceptable. I remind the Committee that the serious default test recognises the fact that the restraint is an aspect of criminal proceedings where a similar test applies in general before ex gratia payments are made.
The practical effects of the amendments could be enormous. For example, every defendant acquitted on a technicality could lodge a claim for compensation in respect of alleged loss while his property was under restraint. As I explained in relation to the first set of amendments, enforcement authorities must not be inhibited from performing their duties. The amendments would have precisely that effect. Indeed, they would make the whole Bill unworkable.
Obviously, these matters have been considered since they were debated in the other place, but we are less persuaded of the merits of the second set of amendments than we are of the first, because they would make the Bill entirely unworkable.
We do not think that the comparison with the Mareva injunction made by the noble Lord, Lord Goodhart, applies. We are talking about the possibility of criminal proceedings against a

27
defendant. Restraint will be applied only where there is reasonable cause to believe that a defendant has benefited from criminal conduct. Let me make it abundantly clear that we are not discussing fishing expeditions. We do not have criminal prosecution on the basis of fishing expeditions in this country—and quite right too. The same test for compensation applies as under current legislation. There is nothing new about the principle of the Bill's provisions; it has already stood the test of time in existing procedure.
I hope that, having aired this important issue, Members of the Committee will not press their amendments.
4 p.m.
Lord Kingsland: I thank the Minister for his response. There is a curious inequality of approach by the Government between what the Minister said about this part of the Bill and what the Government provide in Part 7. Under Part 7, covering money laundering, which the Committee has yet to discuss, an individual who negligently fails to report a particular transaction will be subject to criminal proceedings. Yet in this part of the Bill, a member of the executive arm in one form or another will not be liable, even in negligence, for failing to observe a duty of care in relation to the particular defendant to which his or her attention is directed.
I submit that that is unacceptable. It is wholly appropriate for public officials exercising their powers under this part of the Bill to be subject to the law of negligence. Clearly, a duty of care must be owed, but once it is established that that duty of care is owed, an appropriate standard of conduct should apply.
I appreciate the careful attention that the Minister paid to the amendment. I shall not press it now, but I shall almost certainly return to it on Report. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 72 agreed to.
Clause 73 [Order varied or discharged]:
[Amendment No. 77 not moved.]
Clause 73 agreed to.
Clause 74 agreed to.
Clause 75 [Criminal lifestyle]:
[Amendments Nos. 78 to 80 not moved.]
The Deputy Chairman of Committees (Viscount Allenby of Megiddo): Before calling Amendment No. 81, I must inform the Committee that if it is agreed to, I cannot call Amendment No. 82.
Lord Rookermoved Amendment No. 81:
Page 47, line 34, leave out paragraphs (a) to (c) and insert—
"(a) it is specified in Schedule (Lifestyle offences);"
On Question, amendment agreed to.
[Amendments Nos. 82 to 85 not moved.
Lord Rookermoved Amendment No. 86:
Page 48, line 4, at end insert—
"(4) The Secretary of State may by order amend Schedule (Lifestyle offences)."
On Question, amendment agreed to.
[Amendment No. 87 not moved.]
Clause 75, as amended, agreed to.
Clause 76 [Conduct and benefit]:
[Amendment No. 88 not moved.]
Clause 76 agreed to.
Clause 77 agreed to.
Clause 78 [Gifts and their recipients]:
[Amendment No. 89 not moved.]
Clause 78 agreed to.
Clauses 79 to 83 agreed to.
Clause 84 [Property: general provisions]:
Lord Goodhartmoved Amendment No. 90:
Page 51, line 22, at end insert—
"() interests in property"
The noble Lord said: The definition of property in Clause 84 is too wide. Under Clause 42, the Crown Court may make a restraint order prohibiting any person from dealing with what is described as "realisable property" held by him. Under Clause 83, "realisable property" means,
"any free property held by the defendant".
Clause 84(2)(a) states that,
"property is held by a person if he holds an interest in it".
Under Clause 84(2)(f), an "interest" means,
"any legal estate or equitable interest".
Under ordinary property rules, an interest in property can be owned, but ownership of a particular interest in property does not mean that the owner of that interest necessarily owns the other interests in the same property. The definition in the clause radically extends the ordinary meaning of property. It means that the mere holding of an interest in that property may be interpreted, for the purposes of a restraint order, as including the property itself and all other interests in it. For example, if a defendant rents a house, he has a legal estate in that house: that is an interest. Under the terms of Clause 84(2)(a), the defendant would be treated as holding not only his tenancy of the house but the entire interest in the house itself. If the tenancy is of a flat that is part of a block of flats, it is at least arguable that the defendant is to be treated as holding the entire block.
That would mean that property outside the defendant's ownership or control would be treated by the Bill as being held by him and could be subject to a restraint order. It is not good enough to say that the court would not make a restraint order extending to such property or that the court would not, for instance, make a restraint order preventing dealings with a house in which all that the defendant owns is a tenancy. However, even the theoretical possibility that such a restraint order could be made makes it difficult,

29
for example, for the landlord of a property that has been rented by the defendant to dispose of the property itself.
We should make it clear that an interest in property is itself a form of property. That is recognised in Amendment No. 90. Of course, there is nothing in the least unusual about that. In any ordinary definition of property, an interest in a property is a form of property. An interest in a house—whether it be a tenancy, a right of occupation by virtue of a trust or licence or some form of right of way over the land owned with the house—is, in itself, a separate form of property. However, we propose also to remove paragraphs (a) and (b) of Clause 84(2), so that only the interest itself can be subject to a restraint order. Thus, a restraint order would be limited to the extent of a defendant's interest in the property and would not extend to other interests in the same property.
The amendment is sensible, realistic and fair. As the Bill stands, the Government's proposals go well beyond anything that is needed or justified. To make property that does not belong to the defendant and is not, therefore, tainted property potentially subject to a restraint order is seriously wrong and could cause serious hardship. I beg to move.
4.15 p m.
Lord Bassam of Brighton: The noble Lord has set his case out well. Amendments Nos. 90, 142, 202 and 265H would define property as including an interest in property. Amendments Nos. 91, 143, 203 and 265J would delete the gloss on the words "held" and "obtained".
The amendments would re-draft the definitions of property in Clauses 84, 153, 238 and 335. Amendments Nos. 90, 142 and 202 expand the definition of property to include interests. However, we consider that interests are already covered by the wide definition of property, particularly that given in paragraphs (b) and (c) of Clause 84(1).
Amendments Nos. 91, 143 and 203 would delete the gloss on the words "held" and "obtained" in relation to property. As the noble Lord explained, he does not see why that gloss is necessary if the Bill has already provided that property includes an interest. However, the terms "held" and "obtained" appear regularly in the Bill. If the paragraphs were removed, it might cause doubt about what is meant when the Bill states that a person holds or obtains property.
The gloss on the words "held" and "obtained" appears in current legislation at Section 102 of the Criminal Justice Act 1988 and Section 62 of the Drug Trafficking Act 1994. If it were not included in this Bill, it might give rise to the inference that we intended the words "held" and "obtained" to have a meaning that differed from that in existing legislation. That is not the case, and it would be unfortunate if the Bill were to be interpreted in that way.
The amendments to Clause 335, Amendments Nos. 26511 and 265J, seem to be unnecessary. They raise concerns similar to those that we have expressed in respect of Clause 84.
30
For those reasons, we cannot accept the amendment, and we hope that the noble Lord will be able to withdraw it.
Lord Goodhart: The Minister has not really dealt with my arguments on this point. I do not blame him for that; they are, in a sense, highly technical issues of property law. No doubt, the Minister's brief has come from somewhere else. However, there is no doubt about what holding or obtaining property means, in ordinary language. Someone who holds an interest in property holds a form of property. He does not, however, hold a block of flats, simply because he holds a tenancy in the block: he holds the tenancy.
I see no need to resist the amendments on the basis that they would cause any doubt about references elsewhere in this Bill or in other legislation to the holding or obtaining of property. The real problem is that the definition of property in the clause would extend a restraint order beyond the property actually held by the defendant himself and impose a restraint order on any other interest in property in which the defendant held an interest. That goes well beyond anything that can be justified. It is clear that property should be defined in such a way as to mean that all that can be subjected to a restraint order is property held by the defendant himself or tainted property, which can be made subject to a confiscation order. Therefore, I hope that the Government will consider that matter in the interval between now and the Report stage.
Lord Bassam of Brighton: I have listened carefully to what the noble Lord has said and I agree that there is an argument upon which we may need to reflect further. I am prepared to give an undertaking to write to the noble Lord so that we can attempt to reach a common understanding and to answer his point. I can see that this is a useful issue on which we should reach a settled view.
Lord Hope of Craighead: Will the Minister also consider the Scottish position because the same point arises in the amendment to Clauses 152 and 153? I mention the point only because the law of property in Scotland differs in some respects from the law of property in England and Wales and if the matter is being considered in relation to the English property provisions to which the noble Lord referred, it would be right also to consider the Scottish position in order to ensure that the point applies equally.
Lord Bassam of Brighton: It would be right to reflect on that point in order to cover both positions.
Lord Goodhart: I am grateful for the Minister's comments. I shall wait to see what arrives in correspondence, but if a satisfactory arrangement cannot be reached I shall wish to bring the matter back on Report. In the meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 91 not moved.]
Clause 84 agreed to.
Clauses 85 to 87 agreed to.
Clause 88 [Drug trafficking offences]:
On Question, Whether Clause 88 shall stand part of the Bill?
Lord Rooker: I rise to ask the Committee to delete Clause 88 from the Bill. I beg to move.
Clause 88 negatived.
Clause 89 [Money laundering offences]:
Lord Rooker: I rise to ask the Committee to delete Clause 89 from the Bill. I beg to move.
Clause 89 negatived.
Clauses 90 to 93 agreed to.
Clause 94 [Making of order]:
Baroness Buscombemoved Amendment No. 92:
Page 55, line 30, leave out "three" and insert "four"
The noble Baroness said: In rising to speak to Amendment No. 92, I shall speak also to Amendments Nos. 94, 112 and 116 to 118. Amendment No. 92 is a paving amendment for Amendment No. 94, which returns in principle to one of the most important issues of the Bill; that is, judicial discretion.
Members of the Committee will remember that during the course of the first day in Committee, our Amendments Nos. 11, 13, 93, 97, 98 and 144 proposed that the court should have a discretion as to whether an investigation should take place. That proposal was rejected by the noble and learned Lord the Attorney-General on a number of grounds. First, he explained that it was a mandatory process that was not new. Secondly, he said that the provision was the only way to make legislation workable and effective. Thirdly, he said that it was unlikely in the extreme that prosecutors would consider it appropriate to spend the time or resources on pursuing confiscation orders where that was "plainly inappropriate".
The noble and learned Lord the Attorney-General went on to refer to Clause 11 relating to criminal lifestyle, whereby once an investigation has already begun safeguards exist to minimise incorrect assumptions and instances under which the court may consider that there would be a serious risk of injustice if the case were to continue. Those safeguards could be triggered only after an investigation has begun. That said, the discretion of the courts could not be exercised.
Our Amendments Nos. 15, 97, 98 and 146 proposed an alternative which could give the judge a discretion whether to make a confiscation order once the court had had the opportunity to decide whether the defendant had a criminal lifestyle; in other words, the court could exercise discretion once the judge had before him the information which underlay the reason for the prosecutor's request for an investigation. We believed that that was a sensible compromise which would retain some expressed modicum of trust in our judges and would undoubtedly save time and money. The Minister rejected that alternative on the ground
32
that if the defendant had a criminal lifestyle, that was that. The defendant should pass over his money and then seek to persuade the court why he should have it returned.
Turning to the clauses in the Bill relating to Scotland, we are proposing in the amendment another possibility to exercise discretion at an early stage. The effect of the amendment inserts a fourth condition which must be taken into account before the court acts. Clause 94 is central to the confiscation procedure in Part 3 and lists three conditions which must be fulfilled before the court will make a confiscation order. First, the accused must have been convicted of an offence either in solemn or summary proceedings. Secondly, the prosecutor must ask the court to act under that section. Thirdly, the court must decide to order a disposal in respect of the accused. If all three conditions are fulfilled, the court will act under that clause.
The difficulty with that procedure is that no evidence will have been laid before the court at that stage to establish the prosecutor's grounds for asking the court to act under the clause. Clause 104 makes provisions regarding the statement of information which is to be given to the courts by the prosecutor. As currently drafted, however, information under Clause 104 will be provided to the court only after a decision to proceed under Clause 94 has been made.
Our view is that the statement of information should form an integral part of the initial assessment of the case and we therefore suggest that a fourth condition is added to Clause 94 stating that the court will act only after considering a statement of information.
Adoption of that procedure will ensure that the conditions specified in Clause 94 will mirror the procedure detailed in Clauses 107, 108 and 109. In those clauses, the court will not proceed unless it has considered the evidence presented to it by the prosecutor. The inclusion of that fourth condition in Clause 94 would therefore ensure consistency of confiscation procedure throughout this part of the Bill.
As regards Amendment No. 112 and consequential amendments, if it is accepted that the court should receive a statement of information from the prosecutor before acting under Clause 94, the prosecutor will be required to provide a statement at the stage when the confiscation is sought. This amendment and those related seek to reflect the proposed altered procedure. I beg to move.
4.30 p.m.
Lord Hope of Craighead: I support this amendment since it has the support of the Law Society of Scotland. One bears in mind that the second condition is that the prosecutor must ask the court to act under the clause. I believe that in practice a prosecutor would not think it right to take that step unless he was in possession of information which would justify proceeding beyond the opening of the procedure in Clause 94 and carrying it through to the end. Therefore, in practice I suspect

33
that the prosecutor would be in possession of the information called for in the additional condition mentioned in the amendment.
If there were practical reasons why the prosecutor could not at the initial stage provide the information then the position would be rather different. My own experience suggests that in practice the prosecutor would be in a position to do this at the outset. There is much to be said for the point made that it would be better to have the position clarified at the outset so it is established before the procedure gets under way.
Lord Bassam of Brighton: My understanding is that the issue was fairly debated in another place and given quite a lot of consideration. As the noble Baroness said, subsections (2) to (4) of Clause 94 set out three conditions which must be satisfied if the court is to act. As the noble Baroness said, these amendments insert a fourth condition, that the court must first consider the evidence contained in the prosecutor's statement of information.
Our argument is that Amendments Nos. 92 and 94 are unnecessary. The prosecutor's statement, which sets out the Crown's calculation of an accused's proceeds of crime and assets, will in practice always be served on a convicted person and also lodged with the court. Accordingly, the court will always have before it a prosecutor's statement, so that point is satisfied.
If the convicted person has neither a proceeds of crime figure nor assets, then the Crown would not pursue confiscation. Amendments Nos. 92 and 94 would therefore not provide any further safeguard because the protection is already in place. The remaining Amendments Nos. 112, 116 and 118 are consequential on Amendments Nos. 92 and 94.
I am not an expert on the Scottish situation. It is only the prosecutor who can make such a Motion. The court itself cannot instigate confiscation proceedings of its own volition. In addition, confiscation proceedings are only alive and running when the prosecutor makes a Motion and pursues that course. Therefore, the amendment is unnecessary in any event. We see the point which the noble Baroness makes, but we believe that the situation is already covered. I hope that those assurances are sufficient and that the noble Baroness is encouraged to withdraw her amendment.
Baroness Buscombe: I thank the Minister for his response. I accept entirely what he has said, which has given me food for thought. I shall consider it with care and at Report stage we shall consider the contrasting position for England and Wales, which may be very helpful to us. On that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 93 to 98 not moved.]
Baroness Buscombemoved Amendment No. 99:
Page 56, line 23, at end insert—
"() In making representations to the court under subsection (8), any person whom the court thinks is likely to be affected by the order shall he entitled to appear before the court."
34
The noble Baroness said: This amendment seeks to ensure that those persons who are likely to be affected by the making of a confiscation order will have an opportunity to appear before the court to make representations. In essence, it is a probing amendment. While we welcome the expressed position in the Bill, supported by the Law Society of Scotland, to enable third parties who are likely to be affected by a confiscation order to make representations to the court, we believe that it should also be clear from the Bill that such parties can appear before the court to make representations. That should ensure that any confiscation order made will be for the correct amount and that delays in the realisation of the proceeds will be kept to a minimum. Perhaps the Minister can clarify why the reference to representations does not expressly allow for it to be in person. I beg to move.
Lord Rooker: I hope that I shall be able to satisfy the noble Baroness. The amendment seeks to expand on Clause 94(8) but it does not add anything to it. Subsection (8) provides that, before making the confiscation order, the court must take into account any representations made to it by any person who the court believes is likely to be affected by it. In practice, any person who may be affected by such an order is entitled to appear before the court and make out a case. That is a well-established procedure in Scotland and it is endorsed by the courts.
The proposed amendment does not afford third parties any greater rights than are already afforded to them under subsection (8). I realise that the wording might not give that impression, but in practice it is exactly the same. We are like minds on this matter. The amendment is unnecessary to achieve the purpose to which the noble Baroness referred. I have put it on record that it has no effect and that no one will be denied the opportunity to put their case.
Baroness Buscombe: I thank the Minister for his response which I accept with pleasure. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 100 not moved.]
Clause 94 agreed to.
Clause 95 [Time for making an order]:
On Question, whether Clause 95 shall stand part of the Bill?.
Lord Rooker: Later, I shall ask the House to delete this clause. Before doing so, I shall speak to Amendment No. 110A. This amendment and others mirror amendments already agreed to by your Lordships' House when we discussed Part 2 of the Bill. The equivalent of Clause 7 in Part 2 of the Bill has already been deleted and the related amendments arise out of concerns expressed in the other place about the drafting of the postponement provisions.
As presently drafted', Clause 95 states that a confiscation order must be made before sentence. However, that is subject to Clause 103, which makes it clear that if confiscation proceedings are postponed

35
under Clause 102, a confiscation order may be made after sentence. In practice, confiscation proceedings are usually postponed and the sentence will normally be passed before a confiscation order is made. That implies that a confiscation order will normally be made before sentence and that confiscation proceedings will be postponed only exceptionally. The terms of Clause 95, as drafted, are extremely confusing.
The amendments are designed to improve the practical and flexible operation of the Bill and mirror the changes already made in Part 2 of the Bill.
Clause 95 negatived.
Clause 96 [Recoverable amount]:
[Amendment No. 101 not moved.]
Clause 96 agreed to.
Clauses 97 and 98 agreed to.
[Amendment No. 102 not moved]
Clause 99 [Assumptions to be made in case of criminal lifestyle]:
[Amendment Nos. 103 to 105 not moved.]
Clause 99 agreed to.
Clause 100 agreed to.
Clause 101 [Disposal of family home]:
The Earl of Mar and Kelliemoved Amendment No. 106:
Page 60, line 3, at end insert—
"(ba) the needs and financial resources of a person of the same sex as the person concerned, who is and has been for a period of not less than six months living with the person concerned in a relationship which has the characteristics, other than that the persons are of the same sex, of the relationship between husband and wife, or if the person concerned is in custody, had so lived with the person concerned until the person was so remanded;
(bb) the needs and financial resources of any member of the person concerned's family who is, and has been, for a period of not less than six months, living with the person concerned in the family home, or if the person concerned is in custody, has so lived with the person concerned was so remanded;"
The noble Earl said: This group of amendments apply the admired provisions for the treatment of the family home in Scotland. Amendments Nos. 106 and 108 are the substantive amendments; the remainder are consequential.
Amendment No. 106 seeks to extend the protection currently afforded to spouses, former spouses, children and grandchildren, to other members of the accused's family—for example, siblings—and also to same sex partners of at least six months' standing. Anyone for whom the dwelling is home ought to have such protection and a right of representation. Why should there not be equal treatment? All those who live in the dwelling should have their needs and financial resources considered before the decision to dispose of the home is taken. On the subject of same sex partners, I should point out that their relationship has been recognised in the Scottish Parliament's legislation under Section 87(2) of the Adults with Incapacity (Scotland) Act 2000.
36
Amendment No. 108 would require the court to take into account any representation made to it by anyone for whom the dwelling in question is home. It would do so by widening the list of such people under subjection (3) of Clause 101. Elsewhere in the Bill, interested parties are expressly given the opportunity of representation—for example, under Clause 94, which deals with the making of a confiscation order, and under Clause 126, which relates to the protection of persons affected by any action taken by the administrator.
Given the consequences of the sale of a family home for anyone, it is only reasonable that all those involved should be treated equally. I beg to move.
Baroness Buscombe: I support the amendment moved by the noble Earl, Lord Mar and Kellie, to which I have attached my name. The amendment would extend the protections currently available to the spouse and children of the accused's family under Clause 101 to same sex partners of the accused who have been living with the latter for no fewer than six months; and to those members of the accused's family who have been residing with him or her for a similar period.
In expressing my support for the noble Earl, I must reiterate his reference to situations where it is most important to consider both the needs and financial resources of other members of the family who have been residing with the accused in the family home. Let us take, as an example, siblings who could have been residing together for a period of time in a house that is registered in joint names.
4.45 p.m.
Lord Rooker: In some ways, we return to some of the points made in a previous debate on this complicated area of the Bill dealing with rights to the family home. As the noble Earl said, Amendment No. 106 seeks to extend the protections available to the spouse, the former spouse, and the children and grandchildren of the accused's family under Clause 101 to same sex partners of the accused who have been living with the latter for no fewer than six months; and, indeed, to any member of the accused's family who has been residing with him or her for a similar period. As the noble Earl pointed out, some amendments in this group are consequential.
I took advice on this amendment, because my original notes did not indicate whether the matter had been raised in the other place. We are dealing with an important area of the legislation, and I make no complaints about the issue being raised again. However, Clause 101 provides a degree of protection to the accused's spouse, or former spouse, and to any child or grandchild of the accused against the disposal of the family home. That replicates the existing provisions in the Proceeds of Crime (Scotland) Act 1995, which, in turn, mirrors the provisions of Section 40 of the Bankruptcy (Scotland) Act 1985.
The Government and the Scottish Executive believe that any changes in this area of law should not be made in a piecemeal way—I do not mean that in a pejorative

37
sense —but rather as part of a coherent consideration of all the issues involved. To that end, the Scottish Executive intends to issue a draft family law Bill, based on the 1992 report on family law of the Scottish Law Commission. I understand that the intention is to try to produce that draft around the end of this year.
For the convenience of the Committee, I should point out that the matter was raised on Report in another place on 26th February, at cols. 609 to 624 of the Official Report, when exactly the same point was made. We believe that this area of law should be considered in the round rather than in a piecemeal way by tagging it on to this Bill. We need to await a full and proper deliberation and consultation, based upon some draft legislation issued by the Scottish Executive. Given my explanation of the position, I hope that the noble Earl will feel able to withdraw his amendment.
The Earl of Mar and Kellie: I am grateful to the Minister for his response, which I shall certainly want to consider. My instincts are that the Bill is too narrowly drawn, although I take the point that other legislation is similarly narrow. However, if the report of the Scottish Law Commission recommends changes`, we need to know whether that would automatically change this Bill. Indeed, when this Bill is enacted, can the Minister say how it can be subsequently changed?
Lord Rooker: For the avoidance of doubt, I should emphasise the fact that the Scottish Law Commission produced a report in 1992 on family law. The Scottish Executive intends to issue a draft family law Bill based upon that 1992 report. Legislation may, or may not, flow from that process. Obviously I cannot pre-empt a draft Bill to which I am not party and which has not yet been produced—and which, of course, would require consultation and parliamentary approval in Scotland. However, that would be the vehicle for change because it is primary legislation. That is the role of the Scottish Executive in relation to Scottish matters.
Lord Goodhart: Before the Minister concludes, am I right in thinking that there would perhaps be a problem with amending the legislation that will result from this Bill because we are dealing with a United Kingdom Act to which the Scottish Parliament would not be able to make consequential changes? Is there perhaps a case for introducing a power to amend this clause by way of secondary legislation to coincide with Scottish legislation?
Lord Rooker: I do not know the answer to the noble Lord's question. We are legislating here in respect of areas of Scottish law under the agreed devolution settlement proposals. The Scottish Executive agreed that we could deal with this legislation; in other words, we, the Westminster Parliament, are dealing with Scottish arrangements on behalf of the Scottish Executive. I do not know whether it is a two-way process, but, from a practical point of view, I suspect that is must be so. However, that is not a definitive answer.
The Earl of Mar and Kellie: We have had a brief but interesting debate. Clearly, we need further to consider the matter. At this point in the proceedings, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 107 to 110 not moved.]
Clause 101 agreed to.
Clause 102 [Time for making confiscation order]:
Lord Rookermoved Amendment No. 110A:
Page 60, line 44, leave out subsection (1) and insert—
"(1) The court may—

(a) proceed under section 94 before it sentences the accused for the offence (or any of the offences concerned), or

(b) postpone proceedings under section 94 for a specified period.

(1A) A period of postponement may be extended "
On Question, amendment agreed to.
Clause 102, as amended, agreed to.
Clause 103 [Effect of postponement]:
[Amendment No. 111 not moved.]
Lord Rookermoved Amendment No. 111 A:
Page 62, line 1, leave out subsection (6).
On Question, amendment agreed to.
Clause 103, as amended, agreed to.
Clause 104 [Statement of information]:
[Amendments Nos. 112 to 117 not moved.]
Clause 104 agreed to.
Clause 105 [Accused's response to statement of information]:
[Amendment No. 118 not moved.]
Clause 105 agreed to.
Clause 106 [Provision of information by accused]:
[Amendment No. 119 not moved.]
Clause 106 agreed to.
Clause 107 [No order made: reconsideration of case]:
Lord Rookermoved Amendment No. 119A:
Page 64, line 38, leave out "sections 94(4) and 95 do" and insert "section 94(4) does"
On Question, amendment agreed to.
Clause 107, as amended, agreed to.
Clause 108 [No order made: reconsideration of benefit]:
[Amendment No. 120 not moved.]
Lord Rookermoved Amendment No. 120A:
Page 66, line 20, leave out "sections 94(4) and 95 do" and insert "section 94(4) does"
On Question, amendment agreed to.
Clause 108, as amended, agreed to.
Clause 109 [Order made: reconsideration of benefit]:
Lord Rookermoved Amendment No. 120B:
Page 67, line 12, at end insert—
"(aa) there is evidence which was not available to the prosecutor at the relevant time,"

39
The noble Lord said: This group of government amendments deals with the ability of the prosecutor to return to court within six years of the accused's conviction for an increase in the confiscation order or a new confiscation order where none was made at time of the original trial. They mirror the amendments that we have already made to Part 2 of the Bill.
The amendments have three purposes. First, under Clauses 107 and 108, the prosecutor is allowed to apply to the court for a revaluation of the accused's benefit from crime only if he has new evidence. There is currently no requirement of this kind in Clause 109. In theory, an application could be made to the court on the basis of evidence held back in previous proceedings. The first purpose of the amendments is, therefore, to bring Clause 109 into line, so that the prosecutor will be able to apply only if there is new evidence.
Secondly, our intention has always been that more than one revaluation should be possible under Clause 109. In looking again at the reconsideration clauses, we doubt whether the wording of the clause currently achieves that intention. It appears to allow for only one application. We have accordingly taken the opportunity to make it quite clear that there may be more than one revaluation under Clause 109. We have also made changes to Clause 110 making it clear that more than one application can be made under Clause 110.
Finally, Clause 110 permits the prosecutor 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 109. We have taken the opportunity to put it beyond doubt that such applications are permissible.
These are fine-tuning amendments. However, I hope that they will send the same message to the criminal fraternity; namely, that we are coming after them for the proceeds of crime. They will certainly help to ensure that the Bill will operate in Scotland exactly as we would wish. I beg to move.
Baroness Buscombe: Has thought been given to the inclusion of the words, "even if he had made reasonable inquiries"? In other words, the prosecutor could not have known about the evidence in the first instance even if he had made reasonable inquiries. It seems that at present one can have a second bite of the cherry without having to demonstrate that one made an effort in the first place to discover whatever the evidence might be. Surely that cannot be the case unless an effort was made in the first instance.
Lord Hope of Craighead: Perhaps I may intervene in that connection. The noble Baroness's point matches a provision that allows an accused person to appeal on the ground of fresh evidence. That right to appeal is qualified by a provision which disables him from doing so if the evidence on which he seeks to rely was not available to him or was not reasonably available to him. That qualification has often proved to be
40
valuable in doing justice. So there is some force in the noble Baroness's point—namely, in achieving some kind of symmetry between the various provisions that operate in the various branches of the criminal law.
Lord Rooker: Before replying to those points, perhaps I may repeat the point I made earlier. Under Clauses 107 and 108, the prosecutor is allowed to apply to the court for a revaluation of the accused's benefit only if he, the prosecutor, has new evidence. As I said, in theory, he could apply to the court on the basis of evidence that had been held back in previous proceedings. I cannot envisage such circumstances, although I suppose that they must arise. The idea of holding evidence back in earlier proceedings in order to have a go at someone later sounds slightly weird.
The provision is subject to the court's discretion. So the court will not grant an application where it deems it to be inappropriate. It will be for the prosecutor to make the case to the court. It is not as though the prosecutor has carte blanche in this situation.
I re-emphasise the fact that the court will have the discretion. If it thinks it inappropriate for the prosecutor to return to make the case on the basis of new evidence, it will be up to the court to determine that, not the prosecutor.
On Question, amendment agreed to
Lord Rookermoved Amendment 120C:
Page 67, leave out line 15 and insert "relevant amount"
On Question, amendment agreed to.
[Amendment No. 121 not moved.]
Lord Rookermoved Amendment No. 121A:
Page 67, line 18, leave out "on which his belief is based"
On Question, amendment agreed to.
[Amendment No. 122 not moved.]
Lord Rookermoved Amendment No. 122A:
Page 67, line 40, leave out from first "the" to fourth "the" and insert "relevant amount"
On Question, amendment agreed to.
Lord Rookermoved Amendment No. 122B:
Page 68, line 20, at end insert—
"(10A) The relevant time is—

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

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

(10B) The relevant amount is—

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

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

On Question, amendment agreed to.
Clause 109, as amended, agreed to.
5 p.m.
Clause 110 [Order made: reconsideration of available amount]:
Lord Rookermoved Amendment No. 122C:
Page 68, line 34, leave out from third "the" to fourth "the" on line 35 and insert "relevant amount"
On Question, amendment agreed to.
Lord Rookermoved Amendments Nos. 122D and 122E:
Page 68, line 39, leave out "(when the confiscation order was made)"
Page 69, line 8, at end insert—
"(7) 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;

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

(8) The amount found as the accused'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 accused's benefit have been made under section 109 the amount found on the occasion of the last such calculation."

On Question, amendments agreed to.
Clause 110, as amended, agreed to.
Clauses 111 to 117 agreed to.
Clause 118 [Appeal by prosecutor]:
[Amendments Nos. 123 to 126 not moved.]
Clause 118 agreed to.
Clauses 119 to 121 agreed to.
Clause 122 [Conditions for exercise of powers]:
Lord Rookermoved Amendment No. 126A:
Page 76, line 23, leave out from first "the" to end of line 24 and insert "relevant amount (as defined in that section)"
On Question, amendment agreed to.
Lord Rookermoved Amendment No. 126B:
Page 76, line 31, leave out from first "the" to end of line 32 and insert "relevant amount (as defined in that section)"
On Question, amendment agreed to.
Clause 122, as amended, agreed to.
Clause 123 [Restraint orders etc]:
Lord Kingslandmoved Amendment No. 127:
Page 77, line 15, at end insert—
"() to specified parts of the realisable property held by the specified person"
The noble Lord said: I beg to move Amendment No. 127, which I can do telegraphically. In considering what property would be affected by a restraint order, in our view due regard must be given to the principle of proportionality. In that respect, consideration should be given as to whether it is necessary to restrain all realisable property or only specified parts. This
42
amendment seeks to ensure that any action taken is compatible with the European Convention on Human Rights. I beg to move.
Lord Rooker: In response to the noble Lord's final point, I have every reason to believe that this provision is compatible with the European Convention on Human Rights. The certificate on the front of the Bill is not in any way qualified and thus makes a fairly hold statement. I received good advice that I could sign the paper which declared the Bill compatible and I am satisfied that that advice was sound.
The noble Lord has raised an important point. However, Clause 123(2)(a) provides that a restraint order can apply to all realisable property held by a specified person. This amendment seeks to provide that a restraint order need only apply to specified parts of the realisable property. We believe the amendment to be unnecessary. Clause 123(1) already makes it clear that not all the realisable property need be restrained. In other words, the court in exercising its discretion already has the power to order restraint against only specified parts of the realisable property. Given that, I invite the noble Lord to withdraw his amendment.
Lord Kingsland: So far as concerns opinions about compatibility with the European Convention on Human Rights, there are those that are certified and there are those that are certifiable. I cannot accept the view expressed by the noble Lord in the context of this amendment. I wish to test the opinion of the Committee.
5.4 p.m.
On Question, Whether the said amendment (No. 127) shall be agreed to?
Their Lordships divided: Contents, 68; Not-Contents, 143.

Division No. 1

CONTENTS

Anelay of St Johns, B.

Geddes, L.

Astor of Hever, L.

Glentoran, L.

Biffen,L.

Goschen, V.

Blackwell, L.

Gray of Contin, L.

Boardman, L.

Hanham, B.

Brougham and Vaux, L.

Hayhoe, L.

Burnham, L.

Henley, L.

Buscombe, B.

Higgins, L.

Byford, B.

Howe, E.

Caithness, E.

Howe of Aberavon, L.

Carnegy of Lour, B.

Howell of Guildford,L.

Chadlington, L.

HuntofWirral,L.

Cope of Berkeley, L. [Teller]

Kimball,L.

Craig of Radley, L.

Kingsland, L.

Craigavon, V.

Kirkham, L.

Crickhowell, L.

Lucas, L.

Dean of Harptree, L.

McColl of Dulwich, L.

Denham, L.

Marlesford, L.

Dixon-Smith, L.

Marsh, L.

Elles, B.

Monson, L.

Elton, L.

Montrose, D.

Flather, B.

Mowbray and Stourton, L

Freeman, L.

Murton of Lindisfarne, L.

Gardner of Parkes, B.

Naseby, L.

43

Northesk, E.

Sheppard of Didgemere, L.

O'Cathain, B.

Stewartby, L.

Onslow, E.

Strathclyde, L.

Park of Monmouth, B.

Swinfen, L.

Pilkington of Oxenford, L.

Thatcher, B.

Prior, L.

Trumpington, B.

Rawlings, B.

Vinson, L.

Saatchi, L.

Vivian, L.

Seccombe, B. [Teller]

WadeofChorlton, L.

Selborne, E.

Young, B.

NOT-CONTENTS

Acton, L.

Hayman, B.

Addington, L.

Hilton of Eggardon, B.

Ahmed, L.

Hogg of Cumbernauld, L.

Allenby of Megiddo, V.

Hollis of Heigham, B.

Alli, L.

Howells of St. Davids, B.

Andrews, B.

Howie of Troon, L.

Archer of Sandwell, L.

Hoyle, L.

Ashton of Upholland, B.

Irvine of Lairg, L. (Lord Chancellor)

Bach,L.

Barker, B.

Janner of Braunstone, L.

Barnett, L.

Jay of Paddington, B.

Bassam of Brighton, L.

Jenkins of Hillhead, L.

Beaumont of Whitley, L.

Jenkins of Putney, L.

Berkeley, L.

Jones, L.

Billingham, B.

Jordan, L.

Blackstone, B.

Judd,L.

Boothroyd, B.

Layard, L.

Borrie, L.

LeaofCrondall,L.

Boston of Faversham, L.

Lipsey, L.

Brennan, L.

Livsey of Talgarth, L.

Brett, L.

Macdonald of Tradeston, L.

Brookman, L.

McIntosh of Haringey, L. [Teller]

Brooks of Tremorfa, L.

Burlison, L.

Mclntosh of Hudnall,B.

Carlile of Berriew, L.

MacKenzie of Culkein, L.

Carter, L. [Teller]

Mackenzie of Framwellgate, L

Chester, Bp.

McNally,L.

Christopher, L.

Maddock, B.

Clarke of Hampstead, L.

Mar and Kellie, E.

Clement-Jones, L.

Masham of Ilton.B.

Clinton-Davis, L.

Mason of Barnsley, L.

Cohen of Pimlico, B.

Massey of Darwen, B.

Currie of Marylebone, L.

Merlyn-Rees, L.

Dahrendorf, L.

Michie of Gallanach, B.

David, B.

Miller of Chilthome Domer, B

Davies of Coity,L.

Milner of Leeds, L.

Davies of Oldham, L.

Mitchell, L.

Dean of Thornton-le-Fylde, B.

Morris of Aberavon, L.

Desai, L.

Morris of Manchester, L.

Dholakia, L.

Newby, L.

Dixon, L.

Northfield, L.

Dormand of Easington, L.

Orme, L.

Dubs, L.

Paul, L.

Evans of Parkside, L.

Pendry, L.

Farrington of Ribbleton, B.

Peston, L.

Filkin,L.

Pitkeathley, B.

Gale, B.

Prys-Davies, L.

Gavron, L.

Puttnam, L.

Gilbert, L.

Radice, L.

Gladwin of Clee, L.

Ramsay of Cartvale, B.

Goldsmith, L.

Razzall, L.

Goodhart, L.

Rea, L.

Gordon of Strathblane, L.

Rendell of Babergh, B.

Goudie, B.

Rennard, L.

Gould of Potternewton, B.

Richard, L.

Graham of Edmonton, L.

Rooker, L.

Gregson, L.

Roper, L.

Grenfell, L.

Russell, E.

Grocott, L.

Russell-Johnston, L.

Hardy of Wath, L.

St.John of Bletso, L.

Harrison, L.

Sandberg,L.

Haskel, L.

Sawyer, L.

Haskins, L.

Scotland of Asthal, B.

44

Scott of Needham Market, B.

Turner of Camden, B.

Sharp of Guildford.B.

Walmsley, B.

Sheldon, L.

Warner, L.

Shutt of Greetland,L.

Warwick of Underclifle, B.

Simon, V.

Whitty, L.

Smith of Clifton, L.

Wilkins, B.

Symons of Vernham Dean, B.

Williams of Elvel, L.

Taylor of Blackburn, L.

Williams of Mostyn, L. (Lord Privy Seat)

Tenby, V.

Thomas of Walliswood, B.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.15 p.m.
[Amendments Nos. 128 to 130 not moved.]
Clause 123 agreed to.
Clauses 124 to 130 agreed to.
Clause 131 [Enforcement administrators]:
Baroness Buscombemoved Amendment No. 131:
Page 82, line 6, at end insert "and in so doing, to appear before it"
The noble Baroness said: I shall be brief. This amendment is similar in principle to previous amendments. It would ensure that those persons likely to be affected by an enforcement order under Clause 131 would have an opportunity to appear before the court to make representations.
We have been in consultation with the Law Society of Scotland, which welcomes, as we do, the express provision in the Bill to enable third parties who are likely to be affected by orders of the court to make representations to the court. We feel that it should be clear from the Bill that such parties can appear before the court to make those representations. The aim of the amendment is to ensure that those who will be affected by the actions of an administrator under Clause 131 will have such a right. I beg to move.
Lord Rooker: I can be equally brief, because the answer is virtually the same as on the previous amendment. The amendment would not add anything to the clause. Subsection (11) provides that before giving an enforcement administrator the power to manage or realise any realisable property, or before ordering a person to make payments to the administrator, the court must give persons who have an interest in the property an opportunity to make representations to it. The aim of the amendment is to give such persons a right to appear before the court.
However, in practice, any person who may be affected by an action of the court in that regard is entitled to appear before the court and make out their case. This is a well-established procedure in Scotland and is endorsed by the courts. The amendment would not afford third parties any greater rights than are already afforded to them under subsection (11). The question is the same, legitimately asked, and the answer is the same. I therefore hope that the noble Baroness will withdraw the amendment.
Baroness Buscombe: I thank the Minister for his full reply, which I accept entirely. I beg leave to withdraw the amendment.

45
Amendment, by leave, withdrawn.
Clause 131 agreed to.
Clauses 132 to 140 agreed to.
Schedule 2 agreed to.
Clause 141 agreed to.
Clause 142 [Serious default]:
[Amendments Nos. 132 and 133 not moved.]
Clause 142 agreed to.
Clause 143 [Confiscation order varied or discharged]:
[Amendment No. 134 not moved.]
Clause 143 agreed to.
Clause 144 agreed to.
Clause 145 [Criminal lifestyle]:
[Amendment No. 135 not moved.]
Lord Rookermoved Amendment No. 135A:
Page 89, line 9, leave out paragraphs (a) to (c) and insert—
"(a) it is specified in Schedule (Lifestyle offences: Scotland);"
The noble Lord said: In moving Amendment No. 135A, I shall speak also to the other amendments in the group.
These amendments mirror similar amendments that have already been discussed in relation to Part 2 of the Bill. The new Scottish and Northern Ireland schedules determine which single offences will attract a criminal lifestyle and, as a consequence, the application of the assumptions in Clauses 99 or 166 of the Bill. The various offences set out in the Scottish and Northern Ireland schedules correspond to those set out for England and Wales in the schedule we have already debated.
I am quite happy to give a more detailed explanation of the individual amendments but, given my brief explanation of what these amendments seek to do and bearing in mind what has already been done in other parts of the Bill, I hope that they will meet with the Committee's approval.
The Earl of Mar and Kellie: We certainly approve of the schedule proposed in Amendment No. 140A because of the clarity it will bring to the legislation in describing "criminal lifestyle".
On Question, amendment agreed to.
[Amendments Nos. 136 to 139 not moved.]
Lord Rookermoved Amendment No. 139A:
Page 89, line 23, at end insert—
"(3) The Scottish Ministers may by order amend Schedule (Lifestyle offences: Scotland)."
On Question, amendment agreed to.
[Amendment No. 140 not moved.]
Clause 145, as amended, agreed to.
Lord Rookermoved Amendment No. 140A:
Before Schedule 3, insert the following new schedule—
"LIFESTYLE OFFENCES: SCOTLAND
Money laundering
1 An offence under either of the following provisions of this Act—

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

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

Drug trafficking
(2). 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);

(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) (exploration 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).

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).
Conterfeiting
5 An offence under any of the following provisions of the Forgery and Counterfeiting Act 1981 (c. 45)—

(a) section 14 (making counterfeit notes of 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 (c. 26) (unauthorised use etc of trade mark).
Pimps and Brothels
7 An offence under either of the following provisions of the Criminal Law (Consolidation) (Scotland) Act 1995 (c. 39)—

(a) section 11(1) (living on earnings of prostitution or soliciting for immoral purposes);

(b) section 11(5) (running of brothels).

Blackmail
8 An offence of blackmail or extortion.
Inchoate offences
9 (1) An offence of 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."
On Question, amendment agreed to.
Schedule 3 agreed to.
Clause 146 agreed to.
Clause 147 [Tainted gifts and their recipients]:
[Amendment No. 141 not moved.]
Clause 147 agreed to.
Clauses 148 to 152 agreed to.
Clause 153 [Property: general provisions]:
[Amendments Nos. 142 and 143 not moved.]
Clause 153 agreed to.
Clauses 154 to 156 agreed to.
Clauses 157 and 158 negatived.
Clauses 159 and 160 agreed to.
Clause 161 [Making of order]:
[Amendments Nos. 144 to 147 not moved.]
Clause 161 agreed to.
[Amendment No. 148 not moved.]
Clause 162 negatived.
Clause 163 [Recoverable amount]:
[Amendment No. 149 not moved.]
Clause 163 agreed to.
Clauses 164 and 165 agreed to.
[Amendment No. 150 not moved.]
Clause 166 [Assumptions to be made in case of criminal lifestyle]:
[Amendments Nos. 151 to 153 not moved.]
Clause 166 agreed to.
Clauses 167 to 169 agreed to.
Clause 170 [Postponement]:
Lord Rookermoved Amendment No. 154:
Page 100, line 29, leave out subsection (1) and insert—
"(1) The court may—

(a) proceed under section 161 before it sentences the defendant for the offence (or any of the offences) concerned, or

(b) postpone proceedings under section 161 for a specified period.

(1A) A period of postponement may be extended."
On Question, amendment agreed to.
Clause 170, as amended, agreed to.
Clause 171 [Effect of postponement]:
[Amendment No. 155 not moved.]
Lord Rookermoved Amendment No. 156:
Page 102, line 3, leave out paragraph (b).
On Question, amendment agreed to.
Clause 171, as amended, agreed to.
Clause 172 [Statement of information]:
[Amendments Nos. 157 to 159 not moved.]
Clause 172 agreed to.
Clause 173 agreed to.
Clause 174 [Provision of information by defendant]:
[Amendment No. 160 not moved.]
Clause 174 agreed to.
Clause 175 [No order made: reconsideration of case]:
Lord Rookermoved Amendment No. 161:
Page 104, line 21, leave out paragraph (b).
On Question, amendment agreed to.
Clause 175, as amended, agreed to.
Clause 176 [No order made: reconsideration of benefit]:
[Amendments Nos. 162 and 163 not moved.]
Lord Rookermoved Amendment No. 164:
Page 106, line 18, leave out paragraph (b).
On Question, amendment agreed to.
Clause 176, as amended, agreed to.
Clause 177 [Order made: reconsideration of benefit]:
Lord Rookermoved Amendments Nos. 165 to 167:
Page 107, line 10, at end insert—
"(aa) there is evidence which was not available to the prosecutor or the Director at the relevant time,"
Page 107, line 13, leave out from first "the" to end of line and insert "relevant amount"
Page 107, line 16, leave out "on which his belief is based"
On Question, amendments agreed to.
[Amendment No. 168 not moved.]
Lord Rookermoved Amendment No. 169:
Page 107, line 42, leave out from first "the" to end of line 43 and insert "relevant amount"
The noble Lord said: I beg to move.
The Deputy Chairman of Committees (Viscount Allenby of Megiddo): I must inform the Committee that there is a mistake in the Marshalled List. Amendment No. 169 should read as follows:
"Page 107, line 42, leave out from 'the' to 'the' in line 43 and insert 'relevant amount'
On Question, amendment agreed to.
Lord Rookermoved Amendment No. 170:
Page 108, line 25, 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, amendment agreed to.
Clause 177, as amended, agreed to.
Clause 178 [Order made: reconsideration of available amount]:
Lord Rookermoved Amendments Nos. 171 to 173:
Page 108, line 43, leave out from third "the" to fourth "the" in line 44 and insert "relevant amount"
Page 109, line 2, leave out "(when the confiscation order was made)"
Page 109, line 18, 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;

(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 177 the amount found on the occasion of the last such calculation."

On Question, amendments agreed to.
Clause 178, as amended, agreed to.
Clauses 179 to 182 agreed to.
Clause 183 [Defendant convicted or committed]:
[Amendment No. 174 not moved.]
Clause 183 agreed to.
Clause 184 [Defendant neither convicted nor acquitted]:
[Amendment No. 175 not moved.]
Clause 184 agreed to.
Clauses 185 and 186 agreed to.
Clause 187 [Appeal by prosecutor or Director]:
[Amendments Nos. 176 and 177 not moved.]
Clause 187 agreed to.
Clause 188 [Court's powers on appeal]:
Lord Rookermoved Amendment. No. 178:
Page 114, line 30, leave out paragraph (b).
On Question, amendment agreed to.
Clause 188, as amended, agreed to.
Clause 189 [Appeal to House of Lords]:
Lord Rookermoved Amendment No. 179:
Page 115, line 44, leave out paragraph (b).
On Question, amendment agreed to.
Clause 189, as amended, agreed to.
Clauses 190 to 194 agreed to.
Clause 195 [Conditions for exercise of powers]:
Lord Rookermoved Amendments Nos. 180 and 181:
Page 119, line 38, leave out from first "the" to end of line 39 and insert "relevant amount (as defined in that section)"
Page 120, line 1, leave out from first "the" to end of line 2 and insert "relevant amount (as defined in that section)"
On Question, amendments agreed to.
Clause 195, as amended, agreed to.
Clause 196 [Restraint orders]:
[Amendments Nos. 182 to 184 not moved.]
Clause 196 agreed to.
Clauses 197 to 211 agreed to.
Clause 212 [Restraint orders]:
Lord Bassam of Brightonmoved Amendment No. 185:
Page 131, line 4, leave out from "appointed" to end of line 5 and insert "in respect of the property under section 202, 204 or 206"
The noble Lord said: This is a purely technical amendment which brings the wording of Clause 212(5) into line with that of Clause 58(6). I beg to move.
On Question, amendment agreed to.
Clause 212, as amended, agreed to.
Clauses 213 to 221 agreed to.
Clause 222 [Applications and appeals]:
Lord Rookermoved Amendments Nos. 186 to 189:
Page 135, line 23, 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—"
Page 135, line 26, leave out "or"
Page 135, line 33, leave out "is authorised as mentioned in subsection (2)" and insert "falls within subsection (2A)"
Page 135, line 41, leave out "is authorised as mentioned in subsection (2)" and insert "falls within subsection (2A)"
On Question, amendments agreed to.
Clause 222, as amended, agreed to.
Clause 223 agreed to.
Clause 224 [Committal by magistrates' court]:
[Amendment No. 190 not moved.]
Clause 224 agreed to.
Clause 225 agreed to.
Clause 226 [Serious default]:
[Amendments Nos. 191 and 192 not moved.]
Clause 226 agreed to.
Clause 227 [Order varied or discharged]:
[Amendment No. 193 not moved.]
Clause 227 agreed to.
Clause 228 agreed to.
Clause 229 [Criminal lifestyle]:
[Amendment No. 194 not moved.]
Lord Rookermoved Amendment No. 194A:
Page 139, line 34, leave out paragraphs (a) to (c) and insert—
"(a) it is specified in Schedule (Lifestyle offences: Northern Ireland);"
On Question, amendment agreed to.
[Amendments Nos. 195 to 199 not moved.]
Lord Rookermoved Amendment No. 199A:
Page 140, line 4, at end insert—
"(4) The Secretary of State may by order amend Schedule (Lifestyle offences: Northern Ireland)."
On Question, amendment agreed to.
[Amendment No. 200 not moved.]
Clause 229, as amended, agreed to.
Lord Rookermoved Amendment No. 200A:
Before Schedule 3, insert the following new schedule—
"LIFESTYLE OFFENCES: NORTHERN IRELAND
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);

(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);

52

(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 Article 4(1) of the Firearms (Northern Ireland) Order 1981 (S.I. 1981/155 (N.I. 2) (dealing in firearms or ammunition by way of trade or business).
(3) In this paragraph "firearm" and "ammunition" have the same meanings as in Article 2(2) of that Order.
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 (c. 26) (unauthorised use etc of trade mark).
Pimps and brothels
7 (1) An offence under any of the following provisions of the Criminal Law Amendment Act 1885 (c. 69)—

(a) section 2 (procuring a woman or girl);

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

(c) section 8 (detaining a woman in a brothel);

(d) section 13(3) (letting premises for use as a brothel).

(2) An offence under section 1(1) of the Vagrancy Act 1898 (c. 39) (man living on the earnings of prostitution).
(3) An offence under that Act as extended by section 7(4) of the Criminal Law Amendment Act 1912 (c. 20) (woman exercising control over prostitute).
(4) An offence under section 21 of the Children and Young Persons Act (Northern Ireland) 1968 (c. 34) (causing or encouraging prostitution etc of girl under 17).
(5) An offence under Article 8 of the Homosexual Offences (Northern Ireland) Order 1982 (S.I. 1982/1536 (N.I. 19)) (living on the earnings of male prostitute).

53
(6) An offence under Article 122(1)(b) or (c) of the Mental Health (Northern Ireland) Order 1986 (S.I. 1986/595 (N.I. 4)) (procuring or causing prostitution by woman suffering from severe mental handicap).
(7) An offence of keeping a bawdy house.
Blackmail
8 An offence under section 20 of the Theft Act (Northern Ireland) 1969 (c. 16) (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."
On Question, amendment agreed to.
Clauses 230 and 231 agreed to.
Clause 232 [Gifts and their recipients]:
[Amendment No. 201 not moved.]
Clause 232 agreed to.
Clauses 233 to 237 agreed to.
Clause 238 [Property: general provisions]:
[Amendments Nos. 202 and 203 not moved.]
Clause 238 agreed to.
Clauses 239 to 241 agreed to.
Clause 242 and 243 negatived.
Clauses 244 to 247 agreed to.
Clause 248 [General purpose of this Part]:
5.45 p.m.
Lord Goodhartmoved Amendment No. 204:
Page 147, line 32, leave out from "proceedings" to end of line 33.
The noble Lord said: I had to watch myself carefully to make sure that I did not say "not moved" on this occasion. This amendment is a landmark for two reasons. First, it is the first occasion for what seems to me about an hour and a half—it must seem a good deal longer than that to the Deputy Chairmen of Committees—on which we are having a substantive debate on an amendment. Secondly, and rather more importantly, this is the first occasion on which we are debating an amendment to Part 5. Part 5 is a highly important part of the Bill which, unlike Parts 2, 3 and 4, is not foreshadowed by existing legislation.
In moving Amendment No. 204, I wish to speak also to Amendments Nos. 224A, 233 to 236, 237 to 251, 252, 253 and 254 which are grouped with it. The purpose of this group of amendments is to ensure that there is a single mechanism for the recovery of property which is obtained by unlawful conduct. Under the Bill there are two entirely different procedures. One applies to property other than cash, or property which includes cash but does not consist solely of cash, in which forfeiture will take place via a recovery order in the High Court or the Court of Session. The second kind of procedure applies where the property which is to be forfeited consists solely of cash. In such a case forfeiture will take place by means of an order made in England, Wales and Northern Ireland by a magistrates' court or in Scotland by a sheriff.
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There seems to me no logic in having those two separate procedures. Under the present law there is power in some cases relating to money which is suspected of being used in drug or terrorist offences to seize and forfeit cash. But there is no power—until this Bill comes into force—to make a civil recovery order in the High Court or the Court of Session. It seems to me that once the High Court or the Court of Session has been given power to make a recovery order that power should apply to all recoverable property. It seems to me that to make a forfeiture order of this kind is not appropriate for magistrates although I recognise that at present in certain circumstances that can be done.
The forfeiture orders will apply to large sums of money. As I understand it, the Government are likely to make regulations which will ensure that forfeiture orders are not sought for cash sums of less than £10,000. Difficult issues may arise. I think that all of us would agree that this is not by any means an easy Bill; it is an extremely lengthy and complicated one. I believe that it will raise issues which are better dealt with by a higher court than the magistrates' court. The High Court or the Court of Session will have the necessary expertise.
I accept that a power to order the seizure of cash, as opposed to its ultimate forfeiture, can properly be left with justices of the peace. An order for seizure is not a final order. I accept fully that speed is of the essence and that it may be quicker to get a seizure order from a justice of the peace than to seek an order from the High Court. However, I believe that forfeiture of cash should be dealt with by the same method as forfeiture of other assets. I can see no possible logical distinction for forfeiting cash by one method and forfeiting, let us say, the contents of a bank account by another method. If the High Court order is the right method of forfeiting money which is sitting in a bank account, it seems to me that it is still the right method if the respondent takes the cash out of the bank account in £50 notes. For the purpose of achieving a logical and simple system I believe that it would be very much preferable to have a consistent procedure that applies to all forfeiture in civil actions. I beg to move.
The Attorney-General (Lord Goldsmith): Before discussing the detail of the amendments, I want to make a general point about what we are trying to achieve in the Bill, particularly because this is the first amendment relating to Part 5, as the noble Lord, Lord Goodhart, said. We are trying to remove the proceeds of unlawful conduct from circulation. As has been said in this place previously, we want to make it clearer than ever that crime does not pay. In order to ensure that, it is necessary for us to use ends that are fair and effective.
The civil recovery scheme is a new proceeding to recover properties of all kinds other than cash that are found by the police or Customs and Excise. However, the cash forfeiture scheme in Chapter 3 is a development of a scheme that has been successfully

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operating for more than 10 years. That is an important consideration in relation to the venue for those proceedings.
The existing cash seizure, detention and forfeiture proceedings—that is, all stages of the process—under the Drug Trafficking Act 1994, which was previously the Criminal Justice (International Co-operation) Act 1990, take place before the magistrates' court. The venue for the scheme for terrorist cash—the provisions were recently introduced in the Anti-Terrorism, Crime and Security Act 2001—is the same; that is, the magistrates' court.
Magistrates are therefore familiar with the concepts that are involved in cash forfeiture proceedings and have shown themselves able to deal with those concepts to good effect. Just over £3 million was forfeited in 2000–01 under the drugs legislation, which demonstrates that the scheme is successful in practice.
The cash forfeiture element of this part of the Bill is simply an extension of and replacement for the existing Drug Trafficking Act scheme. As I said, that scheme uses the magistrates' court for all parts of the process, and it has done so successfully. We therefore do not agree that there is any reason to alter such a fundamental part of the existing scheme in relation to court venue and cash forfeiture.
I turn to the objections to the amendment and our reasons for opposing it and those amendments that are grouped with it. First, experience has shown, and it is to be expected, that arguments in the magistrates' court in relation to the cash forfeiture scheme will be narrower than those in relation to the new civil proceedings involving other types of property. They are likely to be narrowed to the derivation or destination of the cash; that is, to whether or not that fits the definition of recoverable property. The Government believe, and experience bears out, that the magistrates' court is an appropriate level for such considerations and proceedings. It is expected, therefore, that the cash forfeiture schemes will be quick and simple and that there will be little room for complex arguments. Having different venues for civil recovery, where the issues are likely to be more complex, and cash forfeiture, where they are likely to be more straightforward, seems appropriate. It is not the case, as the noble Lord suggested, that that arrangement is illogical; it appears to us to be logical.
Property law, for example, which can arise under the civil recovery scheme in relation to real property or other forms of property, can be very complex. The Government's view is that those potential complexities, including, for example, the position of interests in property mortgages or tenants, make it appropriate for the High Court. However, cash does not raise the same complex issues and it is appropriate to retain the arrangement in the magistrates' court.
There are also practical considerations that add further weight to the decision to keep cash forfeiture in the magistrates' court. If the amendments were agreed to, the higher courts would be unduly occupied by a potentially large number of inappropriate cases. That
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would result in delays in listing cases and case costs would soar. That is not desirable in terms of making the legislation effective and it will not be in the interests of those who will be affected by it.
There are, of course, important protections. The most important protection that I should mention at this stage is that a decision by the magistrates' court is subject to an appeal to a higher court—to the Crown Court in England and Wales. I emphasise that that appeal involves a rehearing, so that the issues can be ventilated again; the matter is not limited in some way simply to a point of law. The limited number of matters to be decided and the safeguards that are provided in the scheme justify, in our view, the decision to keep cash forfeiture proceedings in the magistrates' court. That deals with Amendments Nos. 204 and 233 to 254.
I turn to Amendment No. 224A, which is also in this group of amendments. Clause 285 provides for certain exemptions from civil recovery proceedings. Subsection (4) establishes that civil recovery proceedings may be taken only if they involve property other than cash that is held by the same person. Proceedings involving cash alone—in effect, where cash is identified and seized by the police or Customs and Excise in the circumstances that are provided for in Chapter 3—are to be brought under the cash forfeiture proceedings.
Subsection (4) is intended to avoid confusion about which scheme applies to cash that is found within the United Kingdom that is alleged to be recoverable property. The amendment raises the possibility of confusion and could lead to inconsistency in relation to the way in which cash alone is treated—sometimes it would be dealt with under Chapter 2 through proceedings in the High Court and sometimes it would be dealt with under Chapter 3 through proceedings in the magistrates' court.
Chapter 3 has been designed specifically for cash alone. It has provisions in relation to the continued detention of cash—for example, as Members of the Committee will have seen, in relation to placing the moneys in an interest-bearing account. Those features are specific to cash and do not appear in Chapter 2.
Those features reflect the fact that we have established procedures for dealing with cash that is found by law enforcement officers that are effective, as they have previously proved to be, and which can have quick results. In those circumstances, the Government's view is that it would be wrong to confuse the situation, as Amendment No. 224A would do. In other words, we should continue to make it clear that cash forfeiture involving the police and Customs and Excise can be dealt with quickly and efficiently through established and tried methods in the magistrates' court. The civil process will be applied to more complex cases, which do not involve cash alone. Those are the reasons why I invite the noble Lord to withdraw the amendment.
Lord Hope of Craighead: I hope that the noble and learned Lord will deal with one or two points that are

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of particular interest north of' the Border. First, an appeal by way of rehearing, which, as he rightly said, is available in the case of an appeal from a magistrates' court, is not available in Scotland. If there is an appeal from the sheriff court to the Court of Session on appeal, that is not an appeal by way of rehearing. That line of reasoning does not carry the same weight in Scotland.
Secondly, there is a power given to sheriffs under general legislation to enable them to refer difficult cases to the Court of Session. Those cases will be heard at first instance in the Court of Session. So far as I can see, there is no provision in the Bill to enable the sheriff to operate that procedure if he felt that it was appropriate for the first hearing, on the facts, to take place in the Court of Session and not before him. Will the Government consider introducing that element of flexibility?
I am afraid that I remain completely unclear on my third point. What happens if one discovers in the repositories of the person involved—the person who is said to have been involved in unlawful conduct—that there is a combination of property and cash? Under the Scottish system, it would be for the same person—the Crown—to take the initiative and bring the proceedings. It would seem strange if it were necessary to bring proceedings at first instance in regard to property in one court and in regard to the cash element in another. If I am wrong about that, I should be relieved, but if I am right about it—if there is a possibility of having to bring parallel proceedings in two different courts at different levels—some element of flexibility would be wise, I respectfully suggest, to enable the sheriff to refer the matter to the Court of Session so that the whole matter could be dealt with in one process.
6 p.m.
Lord Goldsmith: I suspect that the noble and learned Lord will forgive me if I say that the answers to some of his questions are not immediately obvious to me, given that they relate to the procedure in Scottish courts. Sadly, that is not within my knowledge or experience. I certainly want to consider what he said but perhaps I may deal, so far as I can, with the points that he raised.
In the course of dealing with the last of the amendments, I referred to Clause 285(4), which provides that:
"Proceedings for a recovery order may not be taken in respect of cash found at any place…unless the proceedings are also taken in respect of property other than cash which is property of the same person".
The assumption underlying that clause may well be the answer to the third question that the noble and learned Lord raised. But, in relation to his first two questions, I shall have to seek his indulgence and come back to him.
Lord Goodhart: I hear what the noble and learned Lord the Attorney-General says, although I am not
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fully convinced by it. In particular, it seems to me that, although some—probably only a few—magistrates may be familiar with this procedure, it is unlikely that a large proportion of them will be. I accept. of course, that this group of amendments relates entirely to procedure and does not affect the substance of the law. That being so, while I find the division illogical, it is not an issue on which, as a whole, I wish to press the Government much further.
However, I believe that there are a number of more limited issues which we should consider again. I am particularly interested in those raised by the noble and learned Lord, Lord Hope of Craighead, in relation to Scotland, where I, too, am very much at a disadvantage.
It seems to me, first, that there is in England. Wales and Northern Ireland at least a good ground for suggesting that there should be a right for the magistrates' court to say, "We think this is an unsuitable case for us to deal with", where it involves, as some cases will, complicated legal issues, such as property law, which can apply to cash as to other kinds of property. Indeed, in some cases, it may be appropriate to allow the enforcement authority to bring its proceedings again in the High Court if that authority believes that legally it is a difficult case. It might, for example, wish to have an authoritative decision which it could cite in other cases.
I am also somewhat concerned by the nature of the appeal, which at present is to the Crown Court. Again, it seems to me that, while the Crown Court will have experience of dealing with confiscation orders, the Government have maintained throughout that a civil recovery order under Part 5 is a civil action and not a criminal penalty. I believe that, even if the primary jurisdiction for cash forfeiture is left with the magistrates' court, an appeal should go to the High Court rather than to the Crown Court.
Those more limited issues are ones to which I may wish to return further at. subsequent stages. As I said, I do not believe that I am likely to come back in the very wide form in which my amendments are now set out. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingslandmoved Amendment No. 205:
Page 147, line 36, at end insert—
"() No powers conferred by this Part are exercisable in relation to any property which is, or represents, property obtained through unlawful conduct prior to the coming into force of this Part."

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The noble Lord said: I rise to move Amendment No. 205. Clause 316(3) provides the following:
"For the purpose of deciding whether or not property was recoverable at any time (including times before commencement), it is to be assumed that this Part was in force at that and any other relevant time".
As a consequence of that provision, it is possible for a recovery order to be made with respect to a criminal offence committed before the commencement of the Bill. We believe that that is likely to be a breach of Article 7 of the European Convention on Human Rights. That article provides that:
"No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed".
It is the last sentence that is relevant. That sentence prohibits a measure imposing a heavier penalty in respect of a criminal offence than the penalty applicable at the time the criminal offence was committed. If a recovery order is a penalty, then it is a plain breach of Article 7.
We believe that a recovery order is likely to be a penalty. There is no suggestion in the Bill that any property recovered is to be treated as compensation for the victims of the offence. If any property is recovered, it is to be sold and the proceeds paid into the Consolidated Fund. The defendant against whom a recovery order is made is plainly penalised and no compensation goes to the victim. I beg to move.
Lord Goodhart: I did not put my name to this amendment but I rise to support it. I entirely share the view of the noble Lord, Lord Kingsland, that there is a serious risk here that the civil recovery order under Part 5 could be held to be a criminal penalty for the purposes of the European Convention on Human Rights and, therefore, subject to the restriction on imposing punishments that were not available at the time that the crime was committed.
I appreciate that a superficially similar argument has been raised in respect of confiscation orders and that those have been held not to apply by the courts. However, the reason for that is, in so far as the confiscation order is a penalty, it is a penalty for the crime which leads to the confiscation order being made. Therefore, necessarily it can apply only to offences that are committed after the Bill comes into force. Although the money may be the product of earlier offences, the penalty is applied in respect of the offence for which the offender is brought to trial and convicted and for which a confiscation order is then applied.
That is not the case in relation to a civil recovery order under Part 5 because the only offence which is required is that which gave rise to the benefit. That offence may have occurred long before the Bill came into force. The Bill will give power for civil recovery orders to be made in respect of criminal benefits which
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are obtained from unlawful conduct some time in the distant past, subject only to the 12-year limitation period.
That being so, it appears to us that the Government are sticking their necks out in assuming that they can properly do what they have done, which is to impose a recovery order in respect of benefits arising from crimes committed some time in the past, even if no crime has been committed subsequent to the enactment of this Bill. That point was considered by the Joint Committee on Human Rights. Although the committee did not come to a positive conclusion that it would be a breach of the European convention, plainly it was an issue about which it had concerns. I believe that the Government should ensure that their position is secure by accepting the amendment.
Lord Goldsmith: In resisting the amendment I want to distinguish between two important facts: one is the policy and the other is the law and the European convention. With great respect to both noble Lords, neither the noble Lord, Lord Kingsland, nor the noble Lord, Lord Goodhart, dealt with the policy. The Government's position is that they are dealing with a problem that is here and now; that at present there are people who have in their possession large sums of money that are the proceeds of crime committed by themselves or by others.
In late 1999 a survey was carried out by the Government of law enforcement agencies—the matter is public so I am able to refer to it—of how useful the civil recovery mechanism would be. The answer of the law enforcement agencies was that, according to their information, there was about £440 million held by some 400 individuals which they believed was suspect. They may be wrong about that, but that is an indication of the size of the problem.
This amendment proposes that the civil recovery process should be enacted, but that it should not be allowed to bite except on the proceeds of property acquired as a result of someone's criminal conduct after the Bill has been enacted. That means that it could not touch any of the moneys to which I have referred. If the analysis of the noble Lord, Lord Goodhart, is right, it probably could not touch even the further profits of moneys which have been taken as a result of crime and which are invested in some way that is not itself criminal but which will swell the proceeds.
I suggest that the policy question is a straightforward one. If, after the passing of the Act, it can be proved to the satisfaction of a court—it must be proved to a court—that property being held by an individual is the proceeds of crime—it may be the proceeds of drug trafficking or money laundering or racketeering or serious crime—should that individual have any right to continue to hold on to it? The Government's view is that such a person should have no right to continue to hold those proceeds. He should never have had them in the first place and he should not be allowed to hold them now. The policy argument is quite straightforward: should property that can be

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demonstrated to be the proceeds of crime be allowed to remain untouched in the hands of people who hold it at present?
The Government have not gone so far as to say that there should be no time limit. By analogy with civil proceedings, as is apparent from Clause 290, there will be a time limit of 12 years in relation to property. So the position is not unlimited, but by analogy with civil proceedings there would be a limitation period. No doubt one could say, parenthetically, that the older the case, the more difficult it may be to establish to the satisfaction of the court that certain property is the proceeds of crime. That is an evidential matter.
Further, an important element of the policy and of the law is that there is no retrospective definition of unlawful conduct. In other words, when considering whether property is the proceeds of a crime, the conduct considered by the court will be conduct that must have been illegal and criminal at the time. We are not trying to re-invent crimes retrospectively. It could be drug trafficking, organised crime or something that was at the time undoubtedly a crime.
For those policy reasons and having considered the matter carefully, the Government's view is that it is right that there should be some limitation, but that the limitation should be as for civil proceedings—12 years. They also believe that it is right that the Act should bite now and not have a limited effect so that it operates only in relation to future conduct.
The second matter is that of law. It has been asserted by both noble Lords that by reason of Article 7 of the European convention this attempt by the Government will not be effective. As noble Lords know—this point has arisen before—the Government take the view that such proceedings are not caught by Article 7 because they are in the nature of civil proceedings and not criminal proceedings. They are not in the nature of proceedings for a penalty; they are in the nature of civil proceedings.
I hope that the noble Lord, Lord Goodhart, will not mind my picking him up for saying that the Government are wrong in assuming that. The Government are not assuming anything; they have considered the position. I am sure that the noble Lord did not intend to suggest otherwise by his choice of language. I am grateful to him for confirming that with a nod of his head.
The Joint Committee on Human Rights, as the noble Lord said, did not reach a conclusion. It said—I hope I summarise accurately—that it did not find the case law conclusive either way. I entirely accept that it looked at that issue and rightly so because it is an important one. However, based on a series of cases of the European Court in Strasbourg, of the Privy Council, and of the House of Lords, to which I have referred previously in Committee and at Second Reading—although the cases before the House of Lords and the Privy Council are not exactly in point—the Government's view is that they point strongly to the conclusion that such proceedings are civil and not criminal.
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If that is right, the argument based on Article 7 of the convention falls away. If the Government are wrong, no doubt the courts will hold that. It is said that the Government may be taking a risk. Where there may be legal uncertainty, the Government may be doing that, but they are not doing so as a result of an assumption, but having carefully considered the position and in the belief that the policy rule is right. For those reasons I hope that the noble Lords will grapple with the policy consideration. I invite the noble Lord, Lord Kingsland, to withdraw his amendment.
6.15 p.m.
Lord Kingsland: I thank the noble and learned Lord for his full response to my amendment and to the intervention of the noble Lord, Lord Goodhart. We are sympathetic to the Government's policy. We accept that it is wrong that in certain circumstances those who have made ill-gotten gains from a particular criminal activity before the Bill becomes an Act should be entitled to hang on to those gains. We accept that as a policy.
The difficulty that the Government face is that, by their own initiative, the European Convention on Human Rights has been incorporated into English law. The view that the noble Lord. Lord Goodhart, and I take, and, I suspect, also the noble and learned Lord, Lord Lloyd of Berwick, is that, at least on the balance of probabilities, it is more likely than not that this part of the Bill breaches Articles 6 and 7 of the European convention.
Of course, it is true that under the 199'7 Act, the Judicial Committee of your Lordships' House is not bound by decisions of the court in Strasbourg. It is also true—in recent history illustrated by the case of Liversidge v Anderson—that the Judicial Committee has, from time to time in times of crisis, been influenced by policy matters when applying the law. I am not saying, of course, that if this issue comes to be considered by the Judicial Committee of your Lordships' House, it is certain that that committee will adopt the noble and learned Lord's interpretation rather than mine.
Lord Goldsmith: I am grateful to the noble Lord for giving way. I noted his reference to policy and its effect on the judicial mind. Will he accept that it is no part of my argument that the law would be stretched, strained or twisted? The Government's view is that, on the existing case law, to be found in a number of cases, proceedings which confiscate property constitute civil proceedings and that will be the outcome by an application of European law both in Strasbourg and in the courts of this country. Will the noble Lord, Lord Kingsland, accept that that is the reasoning behind my argument? Also, if he is sympathetic to the policy, will he accept that the Government ought to be allowed to make that proposition good by the Bill going ahead in its current form?
Lord Kingsland: I have already said to the Committee that I am sympathetic to the policy.

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However, it is the Government's duty to balance whatever policy they wish to promote with the individual rights of the citizens of this country, and those rights have been enhanced by the Government as a result of the incorporation of the European Convention on Human Rights into our law.
The Government are under a duty in relation to this legislation, as in relation to all other legislation, to certify that each clause conforms with the European Convention on Human Rights. I accept that it is the noble and learned Lord's judgment that Part 5 does so conform. It is simply that, in my judgment, on a balance of probabilities and for the reasons that I have given, it does not. That is why I tabled the amendment.
I ask the Government to think again about their judgment in relation to these clauses. In my submission it is more likely than not that the Government are wrong. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingslandmoved Amendment No. 206:
Page 147, line 36, at end insert—
"(3) The Scottish Ministers must make a code of practice in connection with the relationship between and the order of priority to be given to the criminal confiscation, civil recovery and revenue functions under Parts 3, 5 and 6 of this Act.
(4) Where they propose to issue a code of practice, they must—

(a) publish a draft;

(b) consider any representations made to them about the draft; and

(c) if they think it appropriate, modify the draft in the light of any such representations.

(5) They must lay a draft of the code before the Scottish Parliament.
(6) When they have laid a draft of the code before the Scottish Parliament, they may bring it into operation by order.
(7) They may revise the whole or any part of the code issued by them and issue the code as revised; and subsections (4) and (6) apply to such revised code as they apply to the original code.
(8) The code is admissible in evidence in criminal or civil proceedings and is to be taken into account by a court or tribunal in any case in which it appears to the court or tribunal to be relevant."
The noble Lord said: Amendment No. 206 was inspired by the Scottish Law Society. It makes provision for a code of practice which will specify the relationship between criminal confiscation, civil recovery and the revenue functions contained in Parts 3, 5 and 6 of the Bill.
As I understand it, assurances were given by Ministers both in the Scottish Parliament and in another place that there will be a hierarchy of proceedings; and that a criminal investigation will be given priority over civil recovery. However, as a number of Members of the Committee pointed out in earlier proceedings, that policy intention is not reflected on the face of the Bill.
If the new procedures are to operate effectively and evidence essential to a criminal trial is not to be prejudiced, then the relationship between, and the interaction of, civil and criminal powers should be
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fully explained in a code of practice which has the force of statute. That is what the amendment seeks to achieve. I beg to move.
The Earl of Mar and Kellie: It is not often that I oppose something inspired by the Law Society of Scotland. But Amendment No. 206 is not only a breach of devolution practice, it is also, and even more so, a breach of the Sewel convention.
The inflammatory word for me occurs three times in subsections (3), (4) and (5); that is, the word "must". Members of the Committee will be familiar with spending half an hour discussing the merits of "may" or "shall"; but "must" should generate perhaps a greater length of time. I am not sure that I have ever seen it before. I cannot support the amendment therefore on the grounds of the terminology used.
Lord Kingsland: I am grateful to the noble Earl for drawing my attention to that point. Were the amendment to be redrafted on Report to contain the word "shall" rather than "must", would the noble Earl's intervention be different?
The Earl of Mar and Kellie: I am certain that I would be able to read the amendment in a more calm frame of mind for me to make a decision about it.
Lord Goldsmith: A difficulty exists in addition to that referred to by the noble Earl; that is, that the proposed amendment breaches yet a further convention. It puts upon Scottish Ministers the obligation to give instructions or guidance to the Lord Advocate on criminal matters. That would be inappropriate.
The practical answer is that Scottish Ministers have already published draft guidance on this matter. The draft guidance has been placed in the Library of your Lordships' House. A copy was made available to the Scottish Parliament for the purpose of the Sewel Motion by which that Parliament agreed to Westminster legislating on devolved matters. The guidance sets out the key principles which will govern the operation in Scotland under the powers contained in Parts 3, 5 and 6. I am sure that the noble Lord, Lord Kingsland, read it and had no difficulty with its content.
Therefore, given that that guidance will be published in final form after the Bill receives Royal Assent by the Scottish Ministers and copies placed in the Scottish Parliament, the only question is whether it is right that it should appear on the face of the Bill. For the reasons given by the noble Earl, but also because we regard it as unnecessary in circumstances where Scottish Ministers have provided eminently satisfactory draft guidance which will be published, we oppose the amendment. I ask the noble Lord to withdraw it.
Lord Kingsland: I am grateful to the Minister. When he responded to a testing and apposite intervention by the noble and learned Lord, Lord Hope of Craighead, about half an hour ago, he disclaimed any knowledge

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whatever of Scottish law or procedure. He has clearly spent the past half-hour on the Bench most productively—because in response to me he demonstrated the most extraordinary and intimate knowledge of the workings of both the Scottish legal system and the Scottish constitution.
Lord Goldsmith: If the noble Lord will forgive me, the position is exactly the same in England. I would not accept any Minister giving me instructions as Attorney-General in relation to my prosecution functions. In that respect there is commonality between the two systems of law.
Lord Kingsland: In any event, I am sure that the Scottish Law Society will pay close attention to these proceedings in Hansard, and no doubt between now and Report will express a view as to whether or not this matter should be pursued further. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question. Whether Clause 248 shall stand part of the Bill?
6.30 p.m.
Lord Lloyd of Berwick: At Second Reading I had hoped to galvanise the Opposition Front Benches to mounting an all-out attack on Part 5 of the Bill. That has not happened. Therefore I am left to take up the cudgel still alone.
It is true that some useful amendments have been tabled, some of which have already been debated—two in particular—and they are extremely important. But in my view those amendments are doing no more than chipping at the edges of the problem. The defects in Part 5 are too deep-seated to be dealt with in that somewhat piecemeal way.
Part 5 is objectionable on three different grounds. When I refer to Part 5, I am really referring to Chapters 1 and 2, not Chapter 3, and I shall not be drawn into the question already discussed by the noble Lord, Lord Goodhart, and my noble and learned friend Lord Hope of Craighead of whether there may or may not be some overlap between the civil recovery order and the forfeiture of cash under Chapter 3. The three reasons why I regard Part 5 as objectionable are: first, that it is incompatible with the Human Rights Act 1998; secondly, that the net is cast so wide that it is likely to give rise to cases of grave injustice; and, thirdly, that I doubt whether it will ever be cost-effective in practice and may even prove to be unworkable—like so much of recent criminal legislation, I regret to have to say.
I shall take the three points in turn. I start with the example of a respondent whose unlawful conduct is in issue—in other words, a respondent who is himself alleged to have obtained property through his own drug dealing, racketeering or whatever offence is in question. In such a case, I suggest that a recovery order under Part 5 would in every respect be equivalent to a confiscation order under Part 2, even though he would not have been convicted of any offence in a criminal
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court. Instead, he would be found guilty of the offence in question by a civil court on a mere balance of probabilities. For unless he has been found guilty of unlawful conduct, the recovery procedure under Part 5 will not get off the ground. I hope that when he replies, the noble and learned Lord the Attorney-General will accept my argument at least to that point.
But the next step is that if a recovery order under Part 5 is in those circumstances the equivalent of a confiscation order—I suggest that no other view is possible—it is clear that the confiscation order would be a penalty under Article 7 of the convention. If it is a penalty, it is equally clear that the penalty is intended to be retrospective, as the Attorney-General accepted in reply to an amendment tabled by the noble Lord, Lord Kingsland.
The Attorney-General referred to the limitation period of 12 years in Clause 290. The Committee will notice that 12 years is distinct from the normal period of limitation of six years. That in itself is a strong indication—among many others—that we are here discussing criminal sanctions, not civil reparations. The Attorney-General also drew attention to the fact that the Government do not intend to make retrospective conduct unlawful. Well, thank goodness that they do not, but that is not the question. The question is not whether conduct is made unlawful retrospectively, but whether the penalty is retrospectively made greater than it would otherwise have been.
If all that is so, it follows that the first retrospective recovery order made against a respondent whose own unlawful conduct is in issue will be bound to be challenged in the European Court of Human Rights under Article 7 and the challenge is bound to succeed. I am sorry to sound so definite when the noble Lord, Lord Kingsland, talked about the balance of probabilities and the noble Lord, Lord Goodhart, spoke in a somewhat hesitant manner, hut it seems to be as definite as that. I look forward to hearing from the Attorney-General why that is not so.
At that point, I might simply say, "Quod erat demonstrandum", and sit down, but I think that I should try to anticipate some of the further arguments that the Attorney-General may advance and deal with those that he has already advanced. At Second Reading, he referred to three recent decisions: one of the Judicial Committee of the Privy Council; one of the House of Lords; and one of the European Court. I should have thought that he would by now have accepted that those cases do not help his argument. As the noble Lord, Lord Goodhart, said, they do not bear even a superficial similarity to what we are discussing. They were solely concerned with the scope of Article 6(2) of the convention on a case in which the defendant had already been charged with and convicted of the offence. I am at present concerned not with Article 6(2) but with Article 7. The three cases to which the Attorney-General referred simply do not touch on the question of Article 7.
At Second Reading, the noble and learned Lord also referred to an Irish case, which I have considered" but again, it does not help. The question there was whether

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a civil recovery procedure was or was not unconstitutional. The question of whether it would have been caught by Article 7 of the convention simply did not arise for the good reason that the European Convention is not incorporated into Irish law. It was purely a question of Irish domestic law whether the procedure was constitutional or not.
Why, then, am I so confident that a confiscation order is a penalty within the meaning of Article 7? Simply because that very point was decided by the European Court in the case of Welch. It was argued in that case on behalf of Her Majesty's Government that the purpose of the confiscation regime was preventive and reparative, not punitive. Those are the very arguments advanced by the Home Office in its memorandum of January 2002. At Second Reading, I was on the point of describing that argument as rubbish. Happily, I refrained in time. Instead, it may be less offensive if I say that that argument was unanimously rejected by the court in Strasbourg. In those circumstances, I am somewhat surprised to find it being raised yet again.
It cannot be said that the Welch case was wrongly decided. There may be an attempt to distinguish it on the grounds that it was concerned with a confiscation order—as, clearly, it was—not with a recovery order. However, that misses the point. Everybody agrees that the European Court of Human Rights considers what a piece of legislation does, not what it is called. Otherwise, it would be all too easy for a state to get round convention rights.
I am reminded of an observation made, I think, by the noble and learned Lord, Lord Templeman, in a different context. He said that if we design an agricultural implement for digging and it has a handle and four or five prongs, we have designed a fork. We can call it a spade, if we like, but it remains, in fact and in law, a fork. Likewise, if we design a piece of legislation with the object of depriving a man of some or all of his possessions, after he has been found guilty of unlawful conduct under Part 5, we can describe that as a recovery order, but the European Court will call our bluff and will call it what it is—a confiscation order by another name.
Part 5 is incompatible with the convention rights. It is not good enough for the noble and learned Lord the Attorney-General to say that, although it may be incompatible, he is prepared to take a risk and see what happens.
In raising my second objection, I must say something about the requirements of justice. In the other place, the Minister made much of the major criminal figures—400 in all—who had become untouchable by criminal prosecution and who organised and financed criminal activity without committing particular crimes. The noble and learned Lord referred to the same 400 major criminal figures. If that is the case, it is time that we changed the substantive criminal law, as we did in the Terrorism Act 2000. Under that Act, organising, financing and
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directing a terrorist organisation is a substantive offence. Why should not we do the same in other branches of the criminal law?
If we were still to have difficulty convicting those major criminals, because of problems with getting evidence together and putting it before the court, we should change our law of evidence. For example, we could make telephone intercepts admissible in criminal proceedings, as they should always have been. It is far better to do that than twist the civil law to make it do a job for which it was never intended.
What happens if we do all that and there is still not enough evidence to charge and convict those 400 major criminals before a jury, although there is just enough evidence to persuade a judge on a mere balance of probability? How would the Director of Public Prosecutions put his case? He would say, "I think that you have committed serious offences"—drug dealing, living off immoral earnings or whatever—"and are, therefore, guilty of unlawful conduct under Clause 249. Unfortunately, we cannot put you in prison, because the evidence is not strong enough. I can, however, take your goods instead. In your case, the judge will have no discretion, because he will be bound to make a recovery order under Clause 270". Surely, the defendant is entitled to reply, "I deny that I am guilty of any wrongdoing. You have got the wrong man. If you, representing the Crown, think otherwise, I am entitled to have that matter decided by a jury".
I ask the noble and learned Lord two questions. Does he accept that, in such a case, a person whose serious criminal conduct is in issue ought to be entitled to have the matter decided by a jury? Does he accept that the right to trial by jury is one of our ancient liberties—they were referred to earlier—but that it would seem to be overridden by Part 5, in so far as it applies to a respondent whose own criminal conduct is in issue?
My third objection is that there is a danger that Part 5 will, all too soon, become a dead letter. There may be one or two high-profile cases, but, as soon as the director begins to discover some of the pitfalls connected with Part 5—there are many—and has been taken to Strasbourg once or twice, he may take the view that his time and money would be better spent pursuing convicted offenders under Part 2. That is where his efforts should be concentrated.
It is fanciful to suppose that the 400 major criminals will stand around waiting for an interim receiving order to be served on them under Clause 254. If they are sophisticated enough to have become untouchable by the criminal law, will they not also be sufficiently sophisticated to get round the provisions of the civil law? They might take all their possessions to Ireland; I do not wish to suggest to them what they might do. There must be many ways in which those 400 criminals could avoid the effect of the civil procedure that is proposed. We will then have yet another piece of criminal legislation that looks good on paper but is useless in practice. We all remember a provision now incorporated into the Terrorism Act 2000 that was

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supposed to secure the conviction of the Omagh bombers. Not only has it not done that but it has done nothing, so far as I know.
The Proceeds of Crime Bill is an admirable and much needed Bill. However, the Government have gone a step too far in Part 5. It is incompatible with the Human Rights Act 1998, for the reasons that I have given. That was the view of the Joint Committee on Human Rights, as I read paragraphs 17 to 24 of its further report. I hope that the Minister will think again about whether he was justified in making the statement that appears on the face of the Bill.
6.45 p.m.
Lord Renton: The noble and learned Lord, Lord Lloyd of Berwick, has performed a valuable service, in drawing attention to some of the difficulties that will arise if Part 5 is allowed to stand as it is. My point is fairly brief, and I shall confine myself to Chapter 1 of Part 5. Until I retired from the Bar at the age of 66, roughly a third of my practice was in criminal law. I also spent eight years as a recorder and was sometimes engaged in other judicial criminal court work.
In addressing my main point, I invite the Committee to look at Clause 248(2). It states clearly that:
"The powers conferred by this Part are exercisable in relation to any property (including cash) whether or not the proceedings have been brought for an offence in connection with the property".
Under English law, the offence must be proved beyond reasonable doubt but under Clause 249 there appears to be a strange mix-up in relation to the burden of proof. It is clear enough where there has been a conviction, but subsection (3) states:
"The court of sheriff must decide on a balance of probabilities whether it is proved".
That is quite different from the normal burden of proof under our law in the United Kingdom in criminal cases. I therefore believe that we cannot allow Clause 249, with its variation in the burden of proof before there is liability.
We must also bear in mind that Clause 249(2) states:
"Conduct which…occurs in a country outside the United Kingdom and is unlawful under the criminal law of that country…is also unlawful conduct".
That is, if the conduct occurred in a part of the United Kingdom, it would be unlawful under the criminal law of that part. I find that a confusing piece of drafting and we need to apply our minds to it.
I admire the Government's intention—and I believe it to be valid—of trying to enable property to be recovered which has been obtained by unlawful conduct. That is a sound proposition, but we must be careful to be consistent in the circumstances in which it is proved that conduct has been unlawful and therefore the circumstances in which the property can be recovered.
Lord Goodhart: I rise to speak because the noble and learned Lord, Lord Lloyd of Berwick, said that he sought our support for the Motion but we were unable to give it. I believe that I should therefore explain why that was so.
First, the noble and learned Lord's reference to the remarks of the noble and learned Lord, Lord Templeman, about forks and spades brought back some extremely painful memories. The remarks were made by him in a case in which I appeared for the respondent in the Appellate Committee of your Lordships' House and unfortunately the appeal was allowed. Hearing those remarks again brought back unhappy memories.
The noble and learned Lord, Lord Lloyd, gave three grounds for why the clause should not be allowed to stand. His comments were far-reaching because his real objection was not merely to the clause but effectively to the whole of the part of the Bill, as he made clear. It is therefore by far the most fundamental and important amendment with which we have had to deal. The noble and learned Lord made three points. First, that Clause 248 was incompatible with the European Convention on Human Rights or the Human Rights Act. Secondly, that it might give rise to injustice. Thirdly, he doubted whether it would be cost-effective in practice. The third of those reasons is perhaps the least important and we on these Benches would be prepared to give the Government the benefit of the doubt about it.
I believe that Clause 248 may well be incompatible with the Human Rights Act in so far as it operates retrospectively as discussed in the previous debate. However, in future there will undoubtedly be many cases brought for a civil recovery order in which on no footing can an element of retrospectivity arise because the unlawful conduct complained about occurred after the enactment of the Bill.
In such cases, I find it difficult to see any fundamental incompatibility between Clause 248 and the Human Rights Act. A civil recovery order may well be justified where, for example, a criminal has assets which are within the jurisdiction but he has either gone to ground and disappeared; or he may have gone to some other country from which he cannot be extradited; or he may have died and cannot on any footing be prosecuted. A civil recovery order may also be useful where recovery is sought from a person into whose hands the property has passed and where that person is not the wrong-doer. Therefore, I regard the incompatibility as being partial rather than complete.
As regards the ground that Clause 248 might give rise to cases of injustice, there is undoubtedly a risk. That is perhaps best dealt with by pressing various amendments to this part of the Bill which would reduce the risks of injustice. That may be done by, for example, re-examining the standard of proof necessary in order to activate Clause 248. The question of injustice may be assisted if we narrow the circumstances in which an interim recovery order may be obtained, which is a potential injustice.

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While I have to some extent considerable overlap of agreement with the noble and learned Lord, Lord Lloyd, it does not go so far as to justify a root and branch objection to what would in effect be the whole of Part 5 of the Bill.
Lord Kingsland: I thank the noble and learned Lord, Lord Lloyd, for what I am sure the Committee will agree was a remarkable intervention. I wholly endorse the analysis made by the noble Lord, Lord Goodhart, with respect to the first of the noble and learned Lord's points. As regards retrospectivity, I believe it highly likely that Clause 248 contravenes the European Convention.
As regards subsequent Acts following the passage of the Bill, serious questions remain about compatibility with Article 6. The reason that I felt, at least at this stage of the proceedings, that I was unable to support the noble and learned Lord, Lord Lloyd, was that, at the end of the day, compatibility is a matter for the courts. Given the fact that we, on the Opposition Benches, broadly support the Government's policy in Part 5 of the Bill, at this stage we have taken the view that, although we would prefer the Government to make the appropriate amendments now, on balance it is better to leave matters to the courts at a later stage.
However, that judgment has now been tempered by the perspicacious analysis of the noble and learned Lord, Lord Lloyd of Berwick, with regard to his second head—the issue of grave injustice. The noble and learned Lord is surely right in saying that the effect of Part 5 will be to deny individuals, who have not previously been convicted of a criminal offence, their cardinal right under English law, which is their right to trial by jury. I found that point quite telling. I shall be reflecting on it between now and Report stage and will look afresh at any further intervention that the noble and learned Lord, Lord Lloyd, may like to make as regards Clause 248 when the time comes.
7 p.m.
Lord Goldsmith: Notwithstanding that ultimately the noble and learned Lord's proposition is not supported at this stage—I note what the noble Lord, Lord Kingsland, said—by either of the two opposition parties, it is obviously right that the careful analysis which the noble and learned Lord put forward should be addressed properly. I thank him for that. I shall seek to address it head on. Indeed, we have had a discussion about this already for which I am grateful to him
Before turning to the three points that he makes, I would like to emphasise one or two aspects which run through what I want to say. It is clear from what has already been said on this Bill here and in another place that it is the Government's view, supported until now by the other parties, that Part 5 of the Bill is needed to fill an important gap in the law. Without it and civil recovery, however well meaning and whatever innovative ideas one has about the criminal law the process cannot otherwise be achieved.
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But it is important—and this is at the heart of the Government's approach—that the civil recovery process is focusing exclusively on the origin of property. It is to be a proprietary remedy, which attaches to the property. It will not be dependent on the person who holds the property having been convicted or, more to the point, having committed any offence. I illustrate that by some of the examples in which that will operate. It is not a form of prosecution. Its purpose is not to secure a conviction against any person and it cannot do so. The result of civil recovery cannot be, for example but most pointedly, a sentence of imprisonment on someone for committing serious crime. It is because civil recovery focuses on property rather than on conduct that it is properly, in the Government's view, a civil procedure. It is also why the points made by the noble and learned Lord, Lord Lloyd of Berwick, about the justice of the situation, in our judgment, are inapposite.
First, I want to emphasise, therefore, the hierarchy. The prosecution of offences will remain the priority in all cases. The noble and learned Lord suggested that the director—which I understood to be the director of the assets recovery agency—should prosecute. It is very important to note that the director will have no power to prosecute. The power to prosecute will be the power of the existing prosecution agencies in England and Scotland. It is clear from the hierarchy which has been identified that the prosecution of offences will remain the priority in all cases. That is not intended as a soft option. For example, it is made clear in the draft guidance that it would not be a proper exercise of the prosecutorial discretion—there are two tests for prosecution, the evidential and the public interest test—to say that in the public interest there is no need to prosecute because there is the alternative of civil recovery.
However, in what kinds of cases may civil recovery take place? One example would be where the law enforcement authority has carried out a criminal investigation and consulted the prosecuting authority and a decision not to institute criminal proceedings has been taken applying normal evidential and public interest criteria. I acknowledge that that would be such a case, but I emphasise that the decision not to prosecute would be taken without regard to whether civil recovery may be available.
But there are many other examples which do not even touch on the possibility that the respondent is actually himself or herself being accused of criminal conduct; where the person suspected of the unlawful conduct through which property was obtained is not available because that person is dead or abroad and there is no reasonable prospect of securing their extradition. That is even before any advice has been given to such people to leave the jurisdiction.
A related example would be if a person had been convicted of an offence abroad, for example, for drug-related crime, but had recoverable property in the United Kingdom. The important point is that law enforcement and prosecution authorities will ensure that the possibility of bringing criminal proceedings has been fully considered in every case.

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The second point is that when the civil recovery process takes place it will be governed by the normal civil procedure rules. There will be court proceedings in the High Court and civil procedure rules will apply. In Northern Ireland it will be according to the rules of the Supreme Court and in Scotland, I understand—without fully understanding what it means—according to the petition rules of the Court of Session. We shall obviously look at the detail of the procedural scheme set out and the safeguards which apply.
There is one aspect I wish to return to. But this part of the Bill is aimed at the need to deal with the problem, the "corrosive effect", referred to by the noble Lord, Lord Kingsland, at Second Reading, of proceeds of crime and of depriving people of the working capital by which further crime, drug trafficking and more serious and organised events can take place.
I turn to the three points made by the noble and learned Lord. The first was that the Bill is incompatible. I am not going to take the point that the clause to which he refers also deals with cash forfeiture. That is not a feature of Part 5 of the Bill to which, I understand, the noble and learned Lord takes objection. Technically, his opposition to the clause standing part of the Bill would cut out that part of the Bill as well. I know that that is not his intention.
It is not the case that what I have been saying is that the Government believe that this may be incompatible. The Government's view is that it is not incompatible. I have been happy to accept that there is a degree of uncertainty. But that, as the noble Lord, Lord Kingsland, said, would be for the courts to determine. The Government would not be going into this matter unless they believed that it was compatible.
Therefore, I beg to differ fundamentally and strongly with the view of the noble and learned Lord that there will be a challenge which would be bound to succeed in Strasbourg. First, the jurisprudence to which I referred previously is, at the very lowest—to use the expression of the noble Lord, Lord Goodhart— at least superficially in point. However, we believe that it goes further. What is being said there, and, indeed, has been said by the courts in Strasbourg, in the Privy Council and in the Judicial Committee of this House, is that when there are proceedings after a conviction but which relate to the proceeds of conduct that has not been the subject of a conviction, that constitutes a civil procedure, not a criminal procedure. I emphasise the fact that that applies not just to the case where the confiscation is in relation to the proceeds of the crime for which there has been a conviction, but conduct for which there has not been a conviction.
Secondly, there is other jurisprudence. For example, there is a decision of the European Court in a case called Raimondi, in Italian law—the reference of which I shall, of course, give to the noble and learned Lord—which does not appear to be that dissimilar when dealing with Mafia situations; and which, again, is helpful. I also mention the case of Welch to which the noble and learned referred. This is not the occasion for
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the full-blown debate as to compatibility that may well take place in court. However, I make the following suggestion to the noble and learned Lord.
The key question in the two cases mentioned was whether or not this was a criminal or a civil matter. That is a very important question, not just for Article 6 but also for Article 7 purposes. Moreover, the particular point in Welch was that there had in fact been a conviction, and what was being done was following as a penalty for that conviction. That is the area in which the criminal confiscation procedures—the forfeiture—differ in a way that puts them on one side of the line from the present case. There will he no conviction in those cases. Therefore, the reasoning in Welch that found it was a penalty for a conviction would simply not apply. I give way.
Lord Lloyd of Berwick: I am obliged. Does the noble and learned Lord accept that one cannot get the civil recovery procedure off the ground unless there has been a finding of unlawful conduct? It does not worry me whether or not one calls that the equivalent of a conviction. There will have to have been a finding of unlawful conduct, which means a criminal offence, made by a civil judge.
Lord Goldsmith: I should like to make a point in reference to the noble and learned Lord's second point and, indeed, to the helpful and important observations of the noble Lord, Lord Renton. There are civil processes all the time that may involve consideration of conduct that is criminal, but in the course of civil procedure that does not mean that they are then subject to trial by jury or that they are to be determined by the criminal standard. When we debate the amendments relating to the burden of proof and the standard of proof, I shall say, as before, that the courts have made it clear that the balance of probabilities standard is a flexible one, and can involve the requirement for more persuasive proof in circumstances where what is being suggested is unlawful conduct. That is a large part of the answer, but it does not make any of that criminal process.
I turn to the noble and learned Lord's second point. From what I have suggested thus far, it is clear that there will be many cases in which the conduct in question is not the conduct of the individual who is the respondent. Further, it is not the case that the court is bound to make a recovery order. I draw the attention of the Committee to Clause 270(3)(b), which provides an important exception in the case where "Convention rights" would be infringed.
In that context, the noble and learned Lord made two points. First, he asked whether I accepted that, in such a case, serious criminal conduct ought to be decided by a jury. The right to trial by jury is an ancient liberty. I do not dispute the proposition about trial by jury for today's purposes—no more than in a case that involved libel, or a property claim by an individual saying that the property had been taken from him by theft. Indeed, no more than in those cases would it be trial by jury, and, therefore, no more in the civil process should it be trial by jury. In other words, if the

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process is one to recover property, which this is, it is entirely appropriate that it should be decided by the court that deals with civil process.
Secondly, the noble and learned Lord stated that Part 5 of the Bill would become a dead letter. I respectfully beg to differ both fundamentally and profoundly with him in that respect. The experience in Australia, in Italy, in Ireland, which I have seen for myself, and in the United States is that this process is an effective and important one; and, indeed, that it does work. However, as the noble Lord, Lord Goodhart, said, that is very much a matter for government to judge. Government have judged that this is an important part of the legislation, which represents an important element in the present law.
I hope that I have substantially covered the points made by the noble and learned Lord. I, too, recall the observation of the noble and learned Lord, Lord Templeman. That is not because I was involved in that case, but because it recalls to me the trenchant way in which the noble and learned Lord was often able to dismiss arguments put by others. I commend the clause to the Committee.
Lord Lloyd of Berwick: By way of reply, perhaps I may point out that the noble and learned Lord won that particular case, while the noble Lord, Lord Goodhart, lost it. I am most grateful for the observations made by the noble Lords, Lord Goodhart and Lord Kingsland. I am especially grateful to the noble and learned Lord the Attorney-General for the care that he has taken to deal with my arguments. However, for the moment, I shall leave the matter.
Clause 248 agreed to.
7.15 p.m.
Clause 249 ["Unlawful conduct"]:
Lord Kingslandmoved Amendment No. 207:
Page 148, line 3, at end insert—
"() Civil proceedings will not be available if there has been an acquittal or conviction in criminal proceedings in relation to the same behaviour alleged or relied on."
The noble Lord said: The purpose of this amendment—in a sense, the point flows from the immediately preceding debate—is to prevent civil proceedings becoming a second bite of the cherry. There is nothing currently in the Bill to prevent the assets recovery agency—the ARA—from bringing civil recovery proceedings at the conclusion of an unsuccessful criminal prosecution. That must be wrong in principle. Someone acquitted at the criminal standard should not, subsequently, be made subject to lengthy asset recovery procedures at the civil standard of proof. Moreover, there is nothing in the Bill that would prevent civil proceedings being brought simultaneously with criminal proceedings. I beg to move.
Lord Goodhart: One of the amendments in this group is Amendment No. 209, which stands in my
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name. I wish, therefore, to support the remarks just made by the noble Lord, Lord Kingsland. As the Bills stands, it is open to the state in the form of the Crown Prosecution Service and the enforcement authority to bring criminal charges, and then, following the acquittal of the defendant by the jury, to come back for a second bite by way of an action for a civil recovery order based on the alleged "unlawful conduct", of which the respondent to that claim has been acquitted. That seems to me to be very close to double jeopardy; indeed, altogether too close to be permissible. Again, even in civil proceedings, a final decision between the parties is binding and the issues cannot be relitigated unless the first decision was obtained by perjury, by fraud, or by something similar.
Where a defendant is acquitted of, for example, murder, I recognise that there have been cases in which the family of the victim has brought a civil action for damages against the murderer and succeeded, despite the acquittal. However, in such a case, the criminal proceedings and the civil proceedings are brought by different parties. What the family seeks is not a penalty but compensation for loss.
Some confusion is being caused here by the use of the word "recovery". It is not, in any real sense that I am aware of, recovery that is being sought. What is happening is that the state, which has actually lost nothing, is forfeiting money that has been acquired by criminal means. That is an entirely different matter from compensation for loss.
In the case of an unsuccessful prosecution followed by a civil recovery order, the prosecutors in the criminal proceedings and the enforcement authority in the civil action are both organs of the state. If a jury is not satisfied that the respondent is guilty of unlawful conduct, it should not leave the state with the power to come back via the enforcement authority with a retrial of exactly the same issues. In these cases, the Crown Prosecution Service and the enforcement authority should work together.
I have serious questions about whether, in a case where there was real doubt whether a prosecution would succeed, it should properly be open to the prosecution to elect not to proceed with the charges and, instead, leave the authority to proceed for a civil recovery order. Even if that is permissible, clearly, where the prosecution has elected to go for a criminal prosecution and that is unsuccessful and leads to acquittal by a jury, then the prosecution should be required to live by its election and it should not in such a case be open to proceed on exactly the same facts which were an issue before a jury to seek a civil recovery order.
Lord Goldsmith: In speaking to Amendments Nos. 207 and 209 perhaps I may speak also to Amendments Nos. 211 and 212.
In relation to Amendments Nos. 207 and 209, I believe that the relationship between civil and criminal proceedings is clear from what I have said so far. The prosecution of criminals will continue to take priority, but there will be cases where there has not been a

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prosecution. If there is a prosecution and a conviction, then criminal confiscation, under provisions in the earlier part of the Bill, will be the normal method of recovering the proceeds of crime. But if no conviction can be obtained, the director may consider civil recovery.
There may be some cases where the outcome of criminal proceedings will mean that civil recovery proceedings are not possible. I shall return to that subject. It will be for the director to decide in the circumstances of each particular case whether that is so. We certainly do not accept that, where a criminal case has not resulted in a conviction, civil recovery action should automatically be barred.
Where a person is acquitted of a specific offence charged in the criminal proceedings, there may be compelling evidence that some of his assets were none the less derived from unlawful conduct by himself or others. For example, he may be charged with theft of property or with handling property. It may be absolutely proved to the hilt that it was stolen property, but he may deny some particular knowledge or participation in the theft and therefore be acquitted. Why should he then, notwithstanding that, be able to hold on to that property? There may be other processes, hut surely the civil recovery process would be entirely appropriate?
New evidence may also come to light after a trial that may show a link between particular property and unlawful conduct. Although a second criminal trial would not be possible, that should not mean that civil recovery proceedings should be barred.
We recognise that there are lifestyle criminals who may avoid conviction because of witness intimidation or for other evidential or procedural reasons; or because of the distance that they put between themselves and the criminality supporting their lifestyle. We believe that it should be open to the state to attack the assets that they hold if there is evidence—sufficient to satisfy the court— that those assets are tainted. The mere fact that a person may not have been found guilty of an individual offence should not act as an automatic bar.
Amendment No. 207 would also prevent proceedings taking place where a person had been convicted in relation to the unlawful conduct. That is at first sight an odd provision, because the person would then have been found guilty. But it is important to note that Clause 310(9) already prevents the civil recovery of property that has been taken into account in deciding a person's benefit from criminal conduct for the purpose of a confiscation order following a conviction. Clause 281(9) provides that where property has been taken into account in this way the confiscation order counts towards whether the enforcement authority's right to recover has been satisfied. If the property has been taken into account, there cannot be double recovery; but if it has not been taken into account and the person has been convicted of an offence, why should the civil recovery process to obtain that property not be available?
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We do not accept that Amendment No. 207—or Amendment No. 209—is correct, even from a position where the respondent to the civil process has been the defendant in the criminal process. But the amendment goes further. Not only would it prevent civil recovery proceedings being taken against the property of the individual who was the defendant; it would also prevent such proceedings being taken against any other person who may have property arising out of that unlawful conduct. So, for example, someone could be prosecuted as a thief and might be convicted as a thief. Against him, the court could only make orders in relation to property that he had, but it would be impossible to take civil recovery proceedings in relation to other people who were holding the property that that person had stolen. That cannot be right.
I turn to Amendments Nos. 211 and 212. They approach the issue in a somewhat different way. They would prevent civil recovery proceedings where a court had decided not to make a confiscation order.
Lord Kingsland: I am grateful to the noble and learned Lord for giving way. When I spoke to Amendment No. 207, I ought to have said that we shall not be moving Amendments Nos. 211 and 212.
Lord Goldsmith: That is very helpful. In those circumstances, I can simply invite the noble Lord to withdraw the amendment, and ask the noble Lord, Lord Goodhart, not to move Amendment No. 209.
Viscount Goschen: Before the Minister sits down, he gave examples of where the criminal proceedings and the civil proceedings might be on a different basis. For example, the drug dealer who has been acquitted of a specific offence may well have other property which has been acquired by nefarious means. The Minister put powerful arguments in such cases. But how would the noble and learned Lord ensure that an issue of double jeopardy could not arise if the two were directly related?
I refer, for example, to the case of a racketeer who has been acquitted of racketeering or of a drug smuggler who has been acquitted of drug smuggling, and yet civil proceedings can be brought against such people on the very same basis. Surely under those circumstances the director of the asset recovery agency could pursue action against an individual which would constitute double jeopardy. How can the noble and learned Lord ensure that in such circumstances that could not happen?
Lord Goodhart: The noble and learned Lord dealt mainly with Amendment No. 207. My Amendment No. 209 is rather more targeted and would eliminate the kind of problem referred to by the noble Viscount, Lord Goschen.
7.30 p.m.
Lord Goldsmith: I apologise for lumping the noble Lord's amendment together with another amendment. So far as concerns Amendment No. 209, although I accept that not all of the points I made in respect of

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Amendment No. 207 go to Amendment No. 209, most are essentially the same. While I accept that the amendment would focus more clearly on the relationship between the conduct of a person at issue in the civil recovery and the decision reached in the previous criminal proceedings, there could still be many different reasons why it would be appropriate to continue with the civil recovery.
I do not shrink from the fact that one of those reasons could be, for example, that either new evidence may come to light after a trial which could not be used to bring further criminal proceedings, or simply that evidence could be available in the civil process which was not available in the criminal one, or that evidence is available in the civil process which would satisfy a court, even though it did not satisfy the criminal process.
Why is that not double jeopardy? So far as the proceeds are concerned, there will not be double jeopardy because the same property cannot be recovered twice. It is not double jeopardy otherwise because the consequence of civil recovery will not be a conviction—a sentence of imprisonmentx2014;against the person whose conduct is at issue.
However, I have indicated that there will be cases where the director may well take the view that, having regard to the way in which the criminal trial proceeded, it would not be appropriate to continue with any form of civil recovery. As I mentioned at the outset of my remarks, that would be a matter to which the director would have regard. He is a public authority subject to the Human Rights Act 1998 and he would have to operate in a proportionate manner. There is no reason to think that the director would proceed in a manner inappropriate in the sense of the civil proceedings then brought. However, I hope that the examples I cited earlier would indicate that there will be many cases in which, whether or not there has been a conviction, it would be entirely appropriate to pursue civil recovery if the evidence is available.
Lord Kingsland: I am most grateful to the noble and learned Lord the Attorney-General for his reply and I apologise to him for not indicating at the outset that I did not intend to pursue Amendments Nos. 211 and 212.
Of course I am not happy with what the noble and learned Lord said in response to our Amendment No. 207; but on Report I shall be content to abandon it in favour of Amendment No. 209, promoted by the noble Lord, Lord Goodhart. It has all the marks of the mind of a Chancery lawyer with the accompanying refinement that one might have expected from that class of practitioner.
It also has the happy coincidence of linking with a telling point made by the noble and learned Lord, Lord Lloyd of Berwick, in his intervention during the reply made to him by the noble and learned Lord the Attorney-General. He spoke of the necessity of being able to identify unlawful conduct. Until unlawful conduct is identified, Chapter 1 of Part 5 would not be
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triggered. I would submit that that important observation links extremely well with Amendment No. 209 in the name of the noble Lord, Lord Goodhart.
In our deliberations on Report, therefore, we shall be backing the noble Lord, Lord Goodhart, on the assumption that he will re-table the amendment. If he does not do so, then we shall adopt it. In the meantime, however, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 208 and 209 not moved.]
Clause 249 agreed to.
Clause 250 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 begins again not before 8.35 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Offshore Chemicals Regulations 2002
7.35 p.m.
Lord Sainsbury of Turvillerose to move, That the draft regulations laid before the House on 26th March be approved [25th Report from the Joint Committee].
The noble Lord said: My Lords, the regulations before the House today apply the provisions of a decision by the OSPAR Convention for the Protection of the Marine Environment of the North-East Atlantic. This decision covers a harmonised mandatory control system for the use and reduction of the discharge of chemicals employed in the offshore oil and gas industry. It was adopted in June 2000 and represents an international commitment which we propose to meet through these regulations under the Pollution Prevention and Control Act 1999.
Under the regulations, operators of offshore oil and gas installations will need to apply to the Secretary of State for permits covering their use and discharge of chemicals. A major component of each application will be a risk assessment of the effect on the marine environment of the discharge of chemicals from the installation. These risk assessments will be examined by my department's technical advisers who will make recommendations about the acceptability of what is proposed and, if necessary, recommend particular conditions in permits. All offshore operations involving the use and discharge of chemicals will be covered—daily production, the drilling of wells, discharges from pipelines and discharges that may occur during decommissioning activities.
These regulations will build on voluntary arrangements that have been in place for many years. Under the voluntary offshore chemicals notification scheme, offshore operators notified my department of chemicals use and discharge which enabled us to provide advice on those chemicals and on the amounts

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that could be discharged. In applying the voluntary scheme, offshore operators have adopted a sensible and pragmatic approach to safeguarding the marine environment. The time has come, however, for a more comprehensive regime for chemicals used by the offshore industry.
The stated purpose of the OSPAR decision is to,
"ensure and actively promote the continued shift towards the use of less hazardous substances (or preferably non-hazardous substances) and, as a result, the reduction of the overall environment impact resulting from the use and discharge of offshore chemicals".
It seeks to achieve this through the screening of chemicals against specified criteria to identify ones that might be hazardous and for which substitutes should be sought. It also calls for the ranking of chemicals according to their potential hazard to allow informed selections to be made by operators and the appropriate issuing of permits. The Government support these new requirements and believe that they will ensure even greater protection for the marine environment.
There has been wide and extensive consultation on the regulations, on the accompanying guidance notes and the regulatory impact assessment. We are therefore aware of and have taken into account the views of stakeholders to ensure that introduction of the regulations will go as smoothly as possible. In addition to the mandatory consultation, my department has held a number of workshops with the industry as well as carrying out informal consultation on various aspects of the regulations such as the charging scheme and the regulatory impact assessment. The responses to the various consultations have supported the introduction of these new controls and virtually all the comments received related to points of clarification rather than points of real substance.
Inevitably, these comments have raised among other things the question of costs. As the regulatory impact assessment shows, the costs to the industry will arise from two areas—the administrative costs to government which will be subject to full cost recovery and the additional costs to industry of preparing permit applications. Over the first two years of the regulations, the costs to government are estimated to amount to £1.2 million and the additional costs to industry £2 million. Obviously, those are not insignificant sums, but I do not believe them to be excessive, particularly in the context of the overall costs of offshore operations—in 2001 the offshore industry spent a total close to £8 billion—and the benefits they will bring in ensuring that the environment is further protected. The offshore industry has acknowledged that once it has become more familiar with the permitting process, those costs will reduce.
We have sought to keep to a minimum the burden that the regulations pose. For example, we accepted the industry's suggestion that only one permit should be issued to the operator of an installation where there are fields tied back to that installation. We have also accepted the industry's suggestion that permits
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covering daily production should be open-ended, with a review every three years. That means that operators would, in effect, have to apply for permits only once. We have also accepted their request that only in certain circumstances should applications for permits be subject to public notice. We appreciate the constructive nature of those comments from the industry and I believe that we have arrived at a set of regulations that strike a sensible balance between enhancing protection of the marine environment and the concerns of the offshore oil and gas industry. I commend the regulations to the House.
Moved, That the draft regulations laid before the House on 26th March be approved [25th Report from the Joint Committee].—(Lord Sainsbury of Turville.)
Baroness Miller of Hendon: My Lords, I thank the Minister for his explanation of these technical regulations and for the clear guidance notes that were provided by the department. Not only do we on these Benches welcome the proposals and accept the need for them, but we also note the wide consultation that has taken place with the industry and with other interested parties such as the Atlantic Frontier Environmental Network.
When these draft regulations were discussed in the other place last week, my honourable friend the Member for Salisbury asked the Minister for Industry and Energy a number of questions. Although the Minister responded sympathetically, I am not certain whether he replied to some of them definitively. 11 shall repeat some of them.
The guidance notes refer to representations being made by members of the public on applications for licences. There seems to be no provision for such representations to be made electronically, even though the industry is going to be required to make its applications by that means. The regulations do not seem to require the applicants to advertise their applications on a website.
It is all very well for an oil company to advertise in the West Highland Free Press, but there may be parties living in other parts of the country for whom that worthy journal is not part of their regular 'weekly reading.
In his response, the Minister in the other place told my honourable friend:
"I will consider the hon. Gentleman's point about electronic responses".
Has that consideration yet taken place, and if it has what conclusions have been reached'?
I am also a little concerned about a further observation of the Minister in another place to the Committee that:
"we must protect the right of people not equipped to respond in that way".
I hope that that does not mean that the Government will refuse to allow that form of response in order to cater for the lowest common denominator. That is apart from the fact that e-mail is becoming an increasingly common form of communication, as the Post Office is finding out to its cost. Facilities are

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available at commercial outlets—the so-called Internet cafés—or at public libraries for members of the public who do not own a PC. Will the Minister assure us unequivocally that the public will be able to respond electronically and tell us where and how that will be made clear to the public? This is an important precedent for future regulations.
The other point raised by my honourable friend concerned the possibility of the use of chemicals at very short notice, when it may be impractical for the operators to apply for permits within the prescribed time limits. That possibility is referred to in the guidance notes. Presumably, that would be as a result of an unforeseen and unforeseeable emergency. The Minister told the Committee that,
"operators should consult my Department as soon as possible".
He went on:
"We have experts available at all times to respond throughout the year. I should perhaps clarify whether that is at all hours of the day and night".
I should be most grateful if the noble Lord were able to give us that clarification now.
The Minister also assured the Committee:
"we will apply these provisions sensibly and flexibly. There is also a defence in the regulations available to operators about what to do if they had made best efforts to inform".—[Official Report, Commons Sixth Standing Committee on Delegated Legislation, 8/5/02; cols. 9–10]
He concluded that passage by saying, "We will clarify that". I assume that he was referring to Regulation 18(2)(b), which says that it shall be a defence to prove that the contravention
"was due to something done as a matter of urgency for the purposes of securing the safety of any person".
I should appreciate that clarification from the Minister today, because I wonder what defence is to be available in an emergency that does not affect the safety of any person, but affects the environment—a major oil spill, perhaps—which might occur totally outside the department's office hours, perhaps at 2 a.m. on Christmas Day.
I repeat that, even with those questions, we welcome the regulations.
Lord Razzall: My Lords, like the noble Baroness, I welcome the regulations and the Government's decision to introduce them to reflect their obligations under the Convention for the Protection of the Marine Environment of the North East Atlantic. I look forward with interest to the Minister's responses to the noble Baroness and I shall not repeat some of her questions, which were raised in another place.
Geography obviously plays a significant part in the effects of an oil or chemical spillage. The United Kingdom will be affected not only by what happens off our waters, but also by what happens in other adjacent territories. What action are other relevant countries on continental Europe taking to comply with their obligations under the same convention?
Lord Sainsbury of Turville: My Lords, I am grateful for the support of the noble Baroness and the noble
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Lord for the regulations. I shall try to deal with the points that they have raised. The format of the public notice has to cover the use of newspapers, because not everyone has websites, but there is no reason why the company cannot put it on their website. I think that the noble Baroness's point was about the response of people to that. As I understand it, responses to those applications can be made to an official named in the notice by letter, by fax or by e-mail. Only for the notice do we think that newspapers should be used.
The noble Baroness also asked about unforeseen events. We will have experts available at all times, day and night, 365 days a year. That covers the point that she raised. We are prepared to move quickly on that issue.
Other countries are moving on the issue. It has taken a long time to put measures in place. Other countries are moving at a similar pace. Different countries are doing different things. Some can use current legislation and others will need to introduce new legislation.
The point of the regulations is that the permit will be installation-specific. The fundamental point is that the marine environment is not the same throughout. There are different water depths, different currents and different life forms, so the permits will be specific to particular installations.
I hope that that answers the main points that have been raised. I believe that the regulations will add to the protection of the marine environment in a manner that is compatible with the continuing success of this country's oil and gas production. They will fit in well with enhanced existing offshore environmental practices. They have been framed to meet the legitimate concerns of the offshore oil and gas industry and consequently strike a proper balance between those concerns and our international commitments.
Lord Razzall: My Lords, before the Minister sits down, does he have the answer to my question about what our continental neighbours are doing to comply with the convention?
Lord Sainsbury of Turville: My Lords, I hope that I covered that in general terms. If it would be helpful, I shall write to the noble Lord setting out specifically what individual countries are doing.
On Question, Motion agreed to.

Building (Amendment) Regulations 2002
7.50 p.m.
Lord Skelmersdalerose to move, That this House calls on Her Majesty's Government to revoke the regulations laid before the House on 5th March (S.I. 2002/440).
The noble Lord said: My Lords, before I speak to the Motion standing in my name and explain my angst at the regulations, I understand that the noble and learned Lord, Lord Falconer, who was to respond to the debate, is unfortunately unable to do so because of

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a death in the family. We have a very able replacement in the noble Lord, Lord Filkin, who, since he was appointed to government, has become something of a multi-role combat Peer in that he seems to shift from subject to subject with great ease and great effect.
I am sure that the House would wish to express its condolences to the noble and learned Lord on the death of his father. I would certainly like to move and join in those condolences.
As to my angst, I wish to call attention to a curious lapse in DEFRA's consultation process with regard to Part L of the building regulations concerning certain operations which can be self-certified in areas of the building trade by organisations specifically set up for that purpose. The statutory instrument in question is that recorded on the Order Paper, 2002/440, the Building (Amendment) Regulations 2002.
As the House will readily observe, the regulations give effect to four self-certification schemes in the building trade. They are: solid fuel combustion appliances and associated equipment; oil-fired combustion appliances and associated equipment; foul and surface water drainage; and, last but not least, replacement windows. Self-certification means that the operation in question does not have to be inspected and passed by the building inspector of the local authority and is by its nature deregulatory, and therefore to be highly commended.
Highly commended, that is, if there has been wide consultation within the industry and the relevant sector of the industry has set up a suitable scheme to operate the deregulation in question. Before the Government decided to set up a self-certification scheme for the first three operations I have mentioned, they did indeed do just that—not once, but twice—in 1997 and again in 1999. As a result, HETAS, OFTEC and the 10P approved persons schemes came into effect for solid and oil-fired combustion appliances and associated equipment and for foul and surface water drainage respectively. Their appearance in the schedule to the 2002 regulations therefore came as no surprise to anyone.
However, I am reliably informed that in those consultations no mention was made of replacement windows. To many of those in the building industry, these came as a complete surprise. Not even a hint that new glazing was to be covered was given by the department in the three years that have elapsed since the previous consultation in 1999. It therefore comes as some surprise that the regulatory impact assessment states in paragraph 9:1 that:
"The representatives of small businesses were consulted".
Anyone coming fresh, as I did, to these words would assume that they were to be interpreted as meaning that a representative selection of members of the building trade were consulted, probably through their trade organisations. That is certainly true as far as the first three items in the schedule are concerned, but, alas, the same cannot he said of replacement windows. In this connection I observe that the Building Advisory Council, as an agent of government, consulted the House Builders Federation, an
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organisation concerned with new houses. Why on earth should the department consult that federation about replacement windows, a matter of no concern to new building but of obvious concern to other small businesses in the building trade, such as the Federation of Small Businesses or, even more appropriately, the Federation of Master Builders? Neither was consulted on re-fenestration, even though they had been on oil and solid fuel and surface and foul drainage, as indeed they should have been.
The Joint Committee on Statutory Instruments, of which I am proud to be a member, decided that even though the regulations are dependent on the Building Act 1984 it would not as a committee complain about the limited exercise of powers. However, that does not prevent me, as a Member of your Lordships' House, from doing so. In my view, the situation I have described comes very close to that. Section 14(3) of the parent Act states:
"Before making any building regulations concerning substantive requirements"—
Which of course these are—
"the Secretary of State shall consult the Building Regulations Advisory Committee"—
I am sure that the department did—
"and such other bodies as appear to him to be representative of the interests concerned".
I do not want to take a vast amount of time over this. I shall merely ask the Minister this question—why the tunnel vision I have described? I rest my case. I beg to move.
Moved, That this House calls on Her Majesty's Government to revoke the regulations laid before the House on 5th March (S.I. 2002/440).—(Lord Skelmersdale.)
Lord Graham of Edmonton: My Lords, I am conscious of the opportunity that we have been given by the noble Lord, Lord Skelmersdale, to discuss this important issue. I am grateful to him for taking the initiative and providing the opportunity.
I declare what was an interest. Until 10 years ago I was the parliamentary adviser to the Federation of Master Builders but I gave up the post when I became the Chief Whip. Although since then I help the federation in any way that I can I am not a paid parliamentary adviser—it is more a declaration of a non-interest. But that is why I am interested in this issue.
I pay tribute to the manner in which the noble and learned Lord, Lord Falconer, responded to my inquiries. He sent me a long letter, which I have passed to the Federation of Master Builders. I am sorry to tell him not that it did not believe a word of it—of course it did—but that it was not satisfied with his explanation.
The news that the noble and learned Lord, Lord Falconer, has suffered a bereavement in his family came as a complete shock to me. I join the noble Lord, Lord Skelmersdale, in his expression of sympathy.

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The Federation of Master Builders states:
"The FMB has no problem with the thrust of the changes to Part L of the building regulations. However, there are serious concerns about the implementation of those changes and particularly the introduction of the FENSA self—certification scheme".
I shall deal more with the consequences of what the FMB asserts has been a lack of consultation. It states:
"We believe that the consultation process prior to the drafting of Statutory Instrument (SI) 440 was inadequate. Instead of limiting consultation to Building Regulations Advisory Committee and specialist associations, the consultation should have been much wider to include the representatives of the tens of thousands of construction firms that work in the general building trade".
The Minister should listen to the next few words very carefully. It continues:
"The FMB and the FSB were not consulted".
However it is perceived by the ministry and the Minister that they were involved in a consultation process, I can say on behalf of the FMB, through a letter I have received from a Mr Andrew Large, that the FMB and the FSB were not consulted.
I have read the documentation and I can understand that assumptions were made, but the noble Lord, Lord Skelmersdale, hit the nail on the head. The crucial meeting in which they should have been involved was when the GGF made arrangements to consider eligibility for membership of FENSA. Those invited to attend the steering group included, among others, key stakeholders in the glazing industry, the District Surveyors Association, the House Builders Federation, the National Consumer Federation, the Institute of Consumer Affairs, the Trading Standards Institute, the British Board of Agrement, the British Standards Institution, the Law Society and ourselves—that is, the Government. In other words, the group did not include those whose livelihoods depend on dealing with the regulations. Although there are specialist double—glazing replacement firms, almost every member of the Federation of Master Builders replaces windows in the course of his other work. I ask the Minister to address that issue head on.
The cost of compliance is another issue. My noble and learned friend Lord Falconer was very careful to point out that small builders have an option: they can either join FENSA, which costs money, or take the local authority route, which also has consequences. One estimate is that compliance could cost £150 per installation. Many small builders employ only one other person, perhaps a son or brother, but they are very proud people. They now face another £150 being added to their costs.
We know about the black economy, and we know about the unscrupulous individuals who tout for business without worrying about charging for VAT. They are otherwise known as cowboys. Small builders, on the other hand, pay VAT. They are law—abiding people. The regulations, however, will further distort the price that they must charge compared with that charged by those who operate in the black economy. The additional costs will put them in serious difficulty.
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If they join FENSA, they will have to meet additional costs of perhaps hundreds of pounds. If there had been proper consultation, they could have made their arguments and perhaps persuaded the Government or those advising them that the fees should be much lower. The fact is that 20 per cent of the 20,000 small businesses represented by the Federation of Master Builders and the Federation of Small Businesses engage in the type of work covered by the regulations.
I ask the Minister to take on board too the impact of the quality mark scheme, which is unarguably designed to improve standards and to meet our Kyoto undertakings. It is also designed eventually to remove from the air more than 1 million tonnes of pollution. Although the concept behind the Government's regulations is to be applauded and supported, perhaps those advising Ministers should be more sensitive to the fact that people depend on the decisions made by Ministers. In this case, some of those people feel that they have had a very raw deal.
I hope that the Minister will not take offence if I tell him that this is simply not good enough. However, the deed is done. This debate is intended to bring the issue out into the open, but there is no question of trying to thwart the Government's intention. Nevertheless, those people, who are fighting daily for their livelihood, deserve better treatment than this.
Baroness Maddock: My Lords, I am very grateful to the noble Lord, Lord Skelmersdale, for introducing this debate. Like others, I express my condolences to the noble and learned Lord, Lord Falconer, on his bereavement. I should also declare a couple of interests. I am a vice—president of the National Home Improvement Council. I am married to the right honourable Alan Beith, Member of Parliament for Berwick—upon—Tweed, who is raising this issue in another place. I am grateful not only to the Federation of Small Businesses and to the Federation of Master Builders, but to him for briefing for this debate.
Noble Lords have clearly expressed people's concerns about this issue. It is not that we do not support the Government's intentions. Noble Lords who have spoken already support those intentions, particularly on energy efficiency. I am particularly supportive of that goal and promoted a private Member's Bill on the very issue. The Government's failure, however, has been to conduct a proper consultation. That is the heart of the issue. Although I believe that they intended to conduct a proper consultation, it is clear from the representations which all noble Lords have received that that has gone slightly wrong. It has gone wrong particularly for small builders, who are most concerned about the issue. I hope that as a result of this debate the Minister will seriously take on board what has been said by noble Lords and by those outside the House about the consultation and see what can be done to minimise the problems. Despite what the Government say, the main concern particularly for small builders is—as the noble Lord, Lord Graham of Edmonton, said—the cost of the regulations.

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Another issue that needs to be sorted out is the way in which consultation is conducted. Some consultation has been done by the DTI and some by the DTLR. We need to be rather more careful when consultation affects more than one department.
Many different issues and schemes affect those who are trying to operate within these regulations, one of which, as previously mentioned, is the quality mark. That is one of the reasons why people feel confused. As various schemes are already in place, they wonder why the Government are not using them.
It is unusual to receive such a large postbag on a statutory instrument. However, in our neck of the woods, in Northumberland, several small builders suddenly found themselves affected by the regulations. As the noble Lord, Lord Skelmersdale, explained, the provisions were originally not part of the general consultation. Specifically, it is the FENSA scheme and window replacements that are causing the problems. As a transition will be difficult for builders, I hope that the Government will consider ways in which they can assist them. We have already had some answers from the Government, who believe that they have consulted the right people. However, I think it is clear that there was a breach and they did not consult the right people. I hope that they will admit that and look at ways in which they can help builders.
The regulations' effect on the type of window chosen for installation is another issue. Different regulations apply depending on whether the windows have metal, wooden or plastic frames. Originally, the same regulations were to apply to all types of window. As I understand it, however, subsequent representations particularly from metal frame manufacturers said that different regulations should apply as metal frames tended to be narrower and use more glass, with a consequently greater solar effect. Although wood and plastic conduct heat very differently from metal, I find the figures somewhat surprising. I do not expect the Minister to be able to tell me now, but I should be very interested to know the precise scientific figures. As I suspect we are promoting rather bad science, I should be very interested to see the correct figures.
Builders are looking for the Government to say, "Yes, we fell down at one point in this consultation. However, we will work now with those builders and their representatives to see what we can do to avoid the trap in future and avoid causing confusion and unnecessary expense for small builders. We will make sure that we have a scheme that works". The main point made by the master builders federation and the Federation of Small Businesses was that if the smaller builders' organisations had been consulted perhaps we would have a different scheme. Perhaps we would have a better scheme as a result of consulting the whole range of people involved in this matter.
Let us face it. One often has one's windows replaced by a small firm of builders. If we are serious about energy efficiency—that is what the matter is about—we want a system that works and that we can record to determine whether it is having an effect. There is a question mark as regards whether effective recording
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will take place to monitor how the measure is affecting energy efficiency. I look forward to hearing the Minister's comments. I hope that he will be positive. The representations that have been made to us have been positive in terms of asking for a better way forward.
Lord Hardy of Wath: My Lords, I shall be extremely brief. As a member of the statutory instruments committee I am well aware—the House will also be aware of this—of the indefatigability of the noble Lord and the vigilance with which he approaches the work of the committee. I hope that my noble friend has taken note of the arguments that have been advanced. The organisation concerned is at the reputable and respectable end of the building industry. The list of consultees seemed to me to be rather long but I hope that it can be extended in future as regards all relevant matters in which this invaluable organisation may be involved.
8.15 p.m.
Baroness Hanham: My Lords, I support my noble friend Lord Skelmersdale who has brought the Motion before the House today. I am grateful to him for doing that in the nick of time as I had heard that there were concerns on the part of both the organisations which have already been mentioned; namely, the Federation of Master Builders and the Federation of Small Businesses.
It is clear from what has been said today that there is considerable concern about the quality of the consultation which has taken place on the regulations. It is not a case of there not having been consultation but of a major part of the relevant consultees having been left out. Although others may have responded for them, they are not grateful for the way that that response has been made on their behalf. They would much rather have responded themselves and, if necessary, had discussions with the Government. There are concerns as regards this matter.
I have absolutely no connection with either of the organisations I mentioned and I do not suppose that any other noble Lord has. However, I have been inspired by their wrath and considerable concern at what has happened by the introduction of the regulations.
It seems to go against all common sense that the self—certification schemes should bring about the presumably unintended result—as seen by the people who are promoting the matter—of small builders facing huge extra costs. I refer to the introduction of the new regulations before the value of the quality mark has been assessed. I refer also to a plethora of self—regulation schemes which will affect small builders far more than large ones. I refer also to a new system which, as I understand it, is unlikely to do what it is intended to do and part of which is designed to protect consumers against rogue traders.
The Kyoto protocol commitment to encourage energy conservation seems to lie behind the proposals. My noble friend Lord Skelmersdale, the Federation of

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Master Builders and the Federation of Small Businesses request that at the very least the Government should agree belatedly to meet the relevant representatives and consider the effect of the regulations. I understand that this is only the first of other potential self—certification schemes. It is nonsensical that they should be introduced against the rationale of at least 20 per cent of members of the business world.
I hope that the Minister will tell us that the appropriate person will be willing to meet representatives of the organisations I have mentioned to discuss the problems they envisage will be associated with the regulations as they do not consider that their case has been heard throughout the consultation process. I hope that the Minister will give us some comfort, albeit that he is standing in, ably as usual, for the noble and learned Lord, Lord Falconer, to whom I offer our condolences.
Lord Filkin: My Lords, I welcome the opportunity to discuss with the House the building regulations and the development of a major and important new initiative of self—certification.
In essence there are good reasons for extending building regulations to other aspects of building works both in the interests of the public in terms of their health and the thermal efficiency of buildings, for example, and in the interests of the responsible end of the building industry. However, were that to be done simply by rolling out the traditional method of extending building regulations and sending applications to building control officers or their private sector equivalents, there could well be legitimate concerns about the increased burden of regulation imposed on builders. It is in that context that the idea of self—certification has been discussed with the building industry from 1997. The aim of it in essence is to allow the building regulations to strengthen the quality of building works to ensure, for example, that we meet Kyoto commitments and to promote competent firms without imposing excessive burden.
The largest and most recent of the self—certification schemes is the fenestration self—assessment scheme, FENSA. We made replacement windows a controlled fitting as a result of changes we made to Part L of the building regulations dealing with the conservation of fuel and power—a total package of changes which will ultimately prevent 1.4 million tonnes of carbon being discharged into the atmosphere. As the House will recognise, there are very serious issues of thermal efficiency and of fuel poverty in the sense that the better the thermo efficiency of our buildings, the less fuel will be consumed. However, it soon became clear that there were 1.2 million replacement window contracts undertaken each year. One can therefore imagine what that would generate in terms of paperwork and process if it was all put through conventional building control. It is in that context that the FENSA scheme, along with others, is considered important.
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I focus on the nub of the debate; that is, the issue of the quality of consultation. Three distinct consultation processes have been going on at the same time. They all to some extent interconnect. There has been consultation on self—certification as a principle and how it should be rolled out in practice. There has been consultation on the changes to Part L of the building regulations dealing, as I indicated, with conservation, fuel and power. There has also been consultation on the FENSA scheme itself on the part of the Glass and Glazing Federation and others.
I turn first to the consultation on self—certification. As has been indicated, proposals for self—certification were first consulted on in 1997 in a document entitled, Proposals for Reducing the Administrative Burden with the Prospect at the same time of Enhancing Health and Safety. That was followed up in 1999 with a document, Taking Forward Self—Certification Under the Building Regulations. The department invited expressions of interest from organisations which considered that their members could comply with the building regulations and therefore were potential candidates for self—certification. The noble Lord, Lord Skelmersdale, rightly said that at that time windows were not mentioned in relation to a potential self—certification scheme because they were not then part of buildings regulations.
The consultation process on self—certification continued and an invitation was open to all. Twenty—nine organisations, including the Federation of Master Builders, expressed interest. The consultation went out to more than 250 organisations, as one would expect. After receiving 29 bids and in consultation with the Buildings Regulations Advisory Committee—BRAC—which is the statutory consultation body that was set up under the Building Act 1984, it was decided to interview 10 organisations. After a lengthy process, which involved interviewing by a BRAC sub—committee, that figure was narrowed down to three others. The regulations deal with that.
I turn to consultation on Part L. The relevant Minister, Mr Raynsford, announced a review of that in February 1998. The first round of formal consultations on it took place in the summer 1998 and suggestions were invited on what measures could be introduced to maximise the contribution that buildings regulations could make to achieving Kyoto targets.
In March 2001, Mr Raynsford announced that consultations on the first round of amendments were complete and that amendments to the regulations would be made as soon as possible later in the year. He also announced that the technical proposition would be published in advance of formal amendment. That was accomplished in April 2001. I point out—I do not believe that this is contested—that changes to the buildings regulations relating to windows have been well known for at least a year. The regulations were laid before Parliament in October 2001. As I said, BRAC has been involved throughout that process, as is required under the legislation.

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The noble Lord, Lord Skelmersdale, asked: why the tunnel vision? I turn to the consultation required under the Building Act 1984. It states that before making any building regulations containing substantive requirements, the Secretary of State shall consult the Building Regulations Advisory Committee and other such bodies as appear to him to be representative of the interests concerned. That is the law, and that is what the department did. The Building Act 1984 refers to the changes to Part L. I do not believe that anyone criticises consulting on that.
Substantive requirements deal with technical matters and are distinct from procedural matters. The FENSA scheme essentially involves consultation on procedural matters. That scheme is a procedural option that firms can choose to follow if they wish. Dealing with the administration of building regulations, such as self—certification, is in most cases not covered by the Act. Invariably and properly, however, the department undertakes extensive consultation on possible policy changes or their application, as it did with regard to self—certification. It does not, however, consult on the drafting of regulations, other than with BRAC and other bodies that are directly concerned.
I turn to the nub of the concerns; that is, consultation on the FENSA scheme. When it became clear that the building regulations needed to be changed if we were to meet Kyoto targets—there was a strong consensus that that was sensible—it also became clear that, given the volume of replacement window contracts that were likely to take place, it was important to consider self—certification as the mechanism for dealing with that. As I said, that was not done in the 1999 scheme because at that time the building regulations did not cover windows.
The Glass and Glazing Federation, which had responded in 1999 saying that it was interested in taking forward self—certification if and when it became appropriate, of its own volition came forward again in, I believe, the autumn of last year and indicated its willingness to explore the development of a self—certification scheme. The department responded positively to that because it seemed potentially to be in all people's interests to do so. It therefore created a representative steering group in autumn 2001, which included stakeholders, as my noble friend Lord Graham said. With the benefit of hindsight, one might say that the House Builders Federation might well have been replaced with strong representation from small builders undertaking replacement work rather than builders undertaking new building work.
Lord Graham of Edmonton: My Lords, the Glass and Glazing Federation volunteered to do that—it offered to work with the interested parties in the industry. Why did it therefore decide to include the House Builders Federation and to exclude master builders and small businesses, which cater for 20 per cent of the total business involved?
Lord Filkin: My Lords, I cannot and should not attempt to second guess what was in the heads of the
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Glass and Glazing Federation when it formed that working group. The vast majority of replacement windows are carried out not by members of the Federation of Master Builders or jobbing builders but by firms that specialise in replacement windows. One would be a lucky Member of this House if one has not, at some stage, been invited by telephone to have one's windows replaced.
Baroness Maddock: My Lords, I recognise that what the Minister says is absolutely true. However, is it not the case that under the new building regulations if any window—an odd window here or there—is replaced, it has to be changed? The small builder who does so becomes involved in the process. That is why they feel so aggrieved.
Lord Filkin: My Lords, I accept that. I was simply seeking to explain why the working group that was set up to explore the development of a self—certification scheme for replacement windows contained the bodies that it did; my noble friend Lord Graham said that he wished that that had been otherwise. Clearly, I cannot second guess its explanation.
There was a substantial debate in the trade press during that period about the development of a self—certification scheme for replacement windows. Moreover, there was a major advertising campaign to promote a large national event at the Aston Villa Conference Centre in December 2001. At that meeting, the Glass and Glazing Federation publicised its proposals for a self—certification scheme, more than 650 people attended. It was a complete sell—out and it is hard to believe that anyone who was active in the building industry would not have been aware of the fact that, besides the conventional building regulation route, there was the proposal to have self—certification.
My noble friend recognised that there was no issue with regard to Part L changes; I am thankful to him for that. The matter focuses on FENSA's wish to be formally consulted rather than the need to be aware of a larger consultation process. I do not know the relationships between the respective trade organisations in that regard. One has to seek to consult people and wherever possible to make them feel that they have been consulted. That avoids people feeling that they are out of the loop.
My noble friend and the noble Baroness, Lady Hanham, also raised the issue of costs. Self—certification will save people substantial amounts of money. If they do not believe that, they should not take part in it and should apply in the normal way for building control approval from a local authority. They have a completely free choice—that is not forced on them in the slightest. If applying for building control regulations as a result of changes to Part L involves costs, which it does, those costs are a product of the changes to the building regulations and not a result of the FENSA scheme. The FENSA scheme is substantially cheaper than the conventional route. For example, not all FMB members will have to pay for the vetting fee; they will have to pay a registration fee of £100, an annual fee of £50 and then, if they deal

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electronically, as one hopes they will, the cost will be £1 per certificate. If the FENSA scheme works as well as we hope it will, the pay—back for any builder who replaces one or two windows using that scheme will be considerable.
The noble Baroness, Lady Maddock, and my noble friend Lord Graham also raised the issue of small builders feeling that they had not been consulted or their views taken seriously. As indicated, I do not believe that there has been any failure in the consultation process. Nevertheless, I consider it important that the Government bend over backwards to ensure that people feel that they have had an opportunity to have their say.
To some extent, one also hopes that if people believe they are not being consulted, they will shout and express their views rather than wait a long time for change. Certainly when I ran a national organisation, if we considered that we were not being consulted, we knocked on the door fairly vigorously. I believe that it is always in the interests of those who are being consulted not to be passive in the process but to shout fairly early on and express that view.
Having said that, I know that my honourable friend in another place—the relevant Minister, Dr Whitehead—will be very pleased to meet the Federation of Master Builders, both to have a little canter over the history of this matter and also, probably more productively, to talk about the future development of the self—certification scheme, how it might develop and how it might also be in the interests of the general master builder or jobbing builder as well as the specialist trader.
Until now, these schemes have been single—trade issues, but there is clearly a question as to how they will develop in the future and whether a scheme might be extended or developed. I can give no commitment that that would be the case, but it would be fruitful to have discussions in order to discover whether it might be possible. I believe that that touches on some of the points raised by the noble Baroness, Lady Hanham, in terms of trying to ensure that what is intended as an efficiency of regulation applies effectively to all respective interests.
The noble Baroness, Lady Maddock, asked me an extremely challenging question on the comparative thermal efficiency of metal frames versus wood and plastics. Unfortunately, I cannot give the thermal coefficients of them all. The Approved Document sets out the thermal properties required for each type of window, taking into account their physical properties. We shall write to the noble Baroness setting out how the thermal values were assessed. They did not involve different regulations, but I shall write in the near future setting that out in greater detail.
In summary, therefore, we believe that the extension of the building regulations in the way that we have talked about is in the interests of the public. Certainly it is in the interests of achieving global warming targets. We also believe that self—certification schemes are very much in the interests of both the public and the responsible end of the building industry.
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It is important that we see how these early trials—that is what they are—as an alternative to conventional building regulations, develop over the coming months and years. In the process of evaluating them, it will be crucial that we pay very close attention to the interests of all types of operatives, firms and organisations in the building industry, including the Federation of Master Builders. I repeat my offer that the Government will be very pleased to meet the Federation of Master Builders and to consider its past interest and ideas for the future.
Lord Skelmersdale: My Lords, I am extremely grateful to all noble Lords who have spoken and joined me in giving the department a moderately sharp rap on the knuckles so far as concerns consultation of the self—certification schemes in general and the FENSA in particular. I am especially grateful to the noble Lords, Lord Graham of Edmonton and Lord Hardy, for totally different reasons. I am grateful to the noble Lord, Lord Graham, because of his expertise in the building trade, acquired by means to which I have not had access. I am also grateful for the vote of confidence from my fellow member of the Joint Committee on Statutory Instruments, the noble Lord, Lord Hardy.
I believe that there is still a slight misunderstanding. The point raised by the noble Lord, Lord Graham, about costs related to cumulative costs. Thus far, there are four self-certification schemes. In order to practise as a general builder, it would be logical and sensible to be a member of all four. I suppose that that runs into some £400 to £500 a year at present, albeit that the individual costs for each application after that are very small.
The Minister gave a clear hint that this was the beginning of a whole range of self-certification schemes. He said that discussions could be held—I do not believe that he put it any higher than that—in relation to rolling all the certification bodies for the building trade into one. It is clear that the Federation of Master Builders, the Federation of Small Businesses and all those who have already been consulted will be extremely interested in joining in those consultations.
My original complaint concerns the FENSA scheme. The point about that scheme is that it does not cover only double glazing. Much of the debate today has been about double glazing. The noble Baroness, Lady Maddock, asked about the coefficient of heat expansion—I believe that that is the technical term—of the various surrounds of double glazing units. Schedule 2A to the regulations talks about the installation,
"as a replacement, of a window, rooflight, roof window or door in an existing building",
whether double—glazed, triple—glazed, quadruple—glazed or single—glazed.
Whether the department came up with this scheme as part of its reaction to the Kyoto agreement or whether it would have done so in any case is a moot point. But that does not matter. And when the Minister claims that only a small percentage of the

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replacement of windows is carried out by the general building trade as opposed to specialists, I am afraid that I find that extremely hard to believe.
In summary, I am very grateful to the Minister for saying that his colleague will be happy to have—indeed, I got the impression that he would slightly encourage—a meeting within the department. I and the noble Lord, Lord Graham, for two, will ensure that that offer is taken up, possibly led by one of us. However, that is for the future. In the meantime, I am very grateful to everyone who has spoken. I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.

Proceeds of Crime Bill
8.39 p.m.
House again in Committee.
Clause 251 [Proceedings for recovery orders in England and Wales or Northern Ireland]:
Baroness Buscombemoved Amendment No. 210:
Page 148, line 30, leave out "thinks" and insert "has reasonable grounds to believe"
The noble Baroness said: Under Part 5 of the Bill an enforcement authority can take civil proceedings to recover property which is or represents property obtained through unlawful conduct and cash which is or represents property obtained through unlawful conduct or intended to be used in unlawful conduct. The defendant to such proceedings may be someone against whom no criminal proceedings have been brought. The civil proceedings may be brought against the widow or executors of the person who obtained the property and they may he entirely innocent of any wrongdoing. Such proceedings will be expensive and may be beyond the means of the defendant. The defendant may be forced to spend a considerable amount of time and money in defending such proceedings. All those who have been involved in any civil proceedings will know what a strain that is.
Therefore, we feel that it is appropriate that such proceedings should not be brought unless the enforcement authority has reasonable grounds to believe that the defendant holds recoverable property. Thinking that the defendant holds recoverable property is not, we suggest, enough. The threshold is far too low. Curiously, it is a test that favours the unintelligent because such a person may well think, quite wrongly, that the defendant holds recoverable property whereas a more intelligent person may not. The commencement of civil proceedings should not, we suggest, depend upon the intelligence of the relevant officer of the enforcement authority. Instead, we believe that a more objective test, which will operate in exactly the same way, is appropriate, whoever makes that decision.
We consider it appropriate for proceedings to be commenced if the relevant officer has reasonable grounds to believe that the defendant holds recoverable property. If there are no such grounds,
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proceedings must not be taken. That is an objective test that is easily understood both by officers of the relevant enforcement authority and by the defendant. Those grounds can be stated in the claim form and if they do not satisfy the test of reasonableness the proceedings can be struck out before any significant costs have been incurred. We believe that that would be fair to both the enforcement authority and to the defendant.
The enforcement authority should not have the right to take civil proceedings unless there are reasonable grounds. Indeed, the defendant should not suffer the strain of being a defendant in the civil proceedings unless there are reasonable grounds. Neither will be prejudiced if there are no reasonable grounds. By contrast, if an unintelligent enforcement officer thinks, quite wrongly, that a defendant holds recoverable property, there will he a substantial injustice to the defendant who will find himself embroiled in costly and time-consuming proceedings that should never have been commenced. I beg to move.
Lord Goldsmith: I suggest that there is some misunderstanding in relation to this provision. The safeguards that the noble Baroness seeks are to be found elsewhere. Clause 251 introduces a new procedure for civil recovery. It provides for two matters: it gives the enforcement authority the basic power to bring the proceedings and it explains what they are for and who the target is. The expression,
"against any person who the authority thinks holds recoverable property",
identifies the target of the proceedings.
The clause is not intended to introduce a free-standing test of the threshold for proceedings. The reasonableness of the proceedings are safeguarded in an entirely different way, which will depend upon what happens in the proceedings. They could go one of two ways: first, there could be an application for an interim receiving order. If there is such an application, as Clause 254(5) makes clear the order depends upon the court being satisfied that there is a good arguable case. At that stage the court would need to be satisfied that there is a good arguable case to allow it to proceed.
If the director does not seek an interim receiving order, the second route would be for a claim form to be issued, which would set out the basis of the claim. That would have two consequences: first, if it were patently obvious that the claim was without any substance whatever, it could be, as the noble Baroness, Lady Buscombe, said, struck out. Secondly, if there is no interim receiving order—that is to say that the property is not frozen—the matter will go to court, and the court will grant the order only if the director persuades the court, on the standard of proof set out in the Bill, that the property is recoverable property and that all the other conditions are met.
This provision is not in the Bill to set out a threshold. I suggest that it would be unusual in any other kind of civil proceedings to have a preliminary threshold before someone can make an application. Let the court

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consider the application when it is made. The amendment would create yet a further hurdle and make it possible for there to be a challenge to the proceedings being instigated, perhaps by way of judicial review or something of that kind, simply by considering whether there are reasonable grounds or whether the director has reasonable grounds. That would not be sensible and would simply add another layer to the process. The substance of the claim will be determined in a different way.
I hope that it will be accepted that the director will bring sensible claims and that the director and his staff will be intelligent. I know that the noble Baroness, by her forensic example, was not suggesting otherwise. That is another practical safeguard that will be in place. With that explanation, I hope that the noble Baroness will feel able to withdraw the amendment.
Baroness Buscombe: I thank the Attorney—General for his response to my amendment. I shall read Hansard with care and consider what he has said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 211 not moved.]
Clause 251 agreed to.
Clause 252 [Proceedings for recovery orders in Scotland]:
[Amendment No. 212 not moved.]
Clause 252 agreed to.
Clause 253 ["Associated property"]:
Lord Goodhartmoved Amendment No. 213:
Page 149, line 21, leave out paragraphs (c) and (d).
The noble Lord said: I would like to know why paragraphs (c) and (d) were included in the definition of "associated property" in Clause 253. Clause 253(1) says,
"'Associated property' means property … which is not itself the recoverable property—

(a) any interest in the recoverable property,

(b) any other interest in the property in which the recoverable property subsists".

It goes on to say,
"(c) if the recoverable property is a tenancy in common, the tenancy of the other tenant".
I would have thought that that was plainly another interest in the property in which the recoverable property subsists, so why are paragraph (c) and the corresponding paragraph (d) in relation to Scotland included? They appear to be unnecessary. I beg to move.
Lord Goldsmith: I was expecting an entirely different challenge to that put forward by the noble Lord, Lord Goodhart. The thinking behind the concept of "associated property" is well understood. It is plainly important that the recovery of recoverable property is not precluded by the fact that it is tied up with associated property. The Bill contains a number of safeguards for the owners of the associated property or those whose interests are affected.
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Clause 253(1), by listing out the different items, seeks to ensure that all varieties of associated property that might be in issue are covered. In the light of earlier discussions, I would not begin to make any suggestions as to the position in Scotland in relation to paragraph (d) and cannot immediately give a precise answer to the question asked about paragraph (c). Thinking on my feet, it seems to me that it does no harm to ensure that everything is covered. I have no doubt that there was a good reason for taking the view that paragraph (c) was necessary. It may be because of the peculiar rules that relate to tenancies in common; for instance, if the property has been severed where it may be said that there is no interest in the recoverable property.
But I shall not teach chancery points to the noble Lord, Lord Goodhart. If there is a better answer than the one I have given, I shall ensure that the noble Lord receives it.
Lord Goodhart: I am not sure that the Attorney-General is any wiser than I am as to the exact reason why those two paragraphs appear. However, it is clearly not a point of substance. If the draftsman chose to include it, I do not wish to take the point any further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 253 agreed to.
Clause 254 [Application for interim receiving order]:
Lord Goodhartmoved Amendment No. 214:
Page 150, line 13, at end insert—
"() But no interim receiving order may be made in relation to property which is alleged to be associated property unless dealings with that property might substantially prejudice the realisation of reasonable property to which the order relates."
The noble Lord said: I now come to a more substantial point which may well raise the issue the Attorney—General was expecting me to raise on the previous amendment.
The definition of "associated property" is plainly one where both the respondent to the claim and some other person have an interest in the property. So the definition of "associated property" is wide enough—this is clearly intentional—to cover both recoverable property in the hands of the respondent, or indeed of some other person, and non—recoverable property, which is nevertheless associated.
I understand why the Government wish to include in the definition of "associated property" property which does not belong to the respondent and is not, itself, in any sense the proceeds of crime. But there are not enough safeguards in place. The definition is too wide and includes property it should not.
The issue is similar to that which I raised in relation to Amendments Nos. 90 and 91. The main example I raised was that of a landlord and tenant. The tenant—I assume he is the respondent in this case—holds a long lease to a house or a flat. That long lease is plainly saleable as a separate asset. The freehold reversion, certainly in the case of the house and possibly in the case of a block of flats, is another interest in the same property and is therefore "associated property". But in

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such a case the lease can be realised without the sale of the freehold and the freeholder should not potentially be subject to an interim receiving order.
I accept that there are circumstances in which a clause of this kind is necessary. The obvious instance is that of the tenancy in common which we have just been discussing. If two people—a husband and wife or any other two people—own property by virtue of a tenancy in common, a separate tenancy in common is plainly not marketable and I understand why, in that case, the receiving order should apply to the interest of the other tenant in common.
In moving Amendment No. 214 I am speaking also to Amendments Nos. 220C, 223B and 224. Amendment No. 214 applies to the case of the interim receiving order which freezes the property. Amendment No. 224 raises the same point in relation to the eventual realisation and sale of the property in order to satisfy the civil recovery order. Again it seems to me that the associated property should not be subject to a sale if the recoverable property is, in practice, saleable without the realisation of the associated property.
To return to the example of the leasehold interest in the house, the leasehold is plainly realisable without recourse to the freehold. It is true, possibly, that if the freehold and leasehold reversion of the property were sold together, there might be some marriage value and that would increase the price. But that does not seem to be an adequate reason for saying that the freehold reversion should be sold. One ought not to make either an interim receiving order or an order for the eventual sale of associated property in cases where the recoverable property on its own can be efficiently and effectively realised without recourse to the associated property. The power to sell associated property should be restricted on the face of the Bill to cases such as that of a tenancy in common where the recoverable property is essentially unsaleable unless it is sold together with the associated property. I beg to move.
Lord Goldsmith: The purpose behind the provisions in relation to "associated property", I apprehend, is accepted and acceptable to the noble Lord, Lord Goodhart. It would therefore be common ground between us that there will be cases where the purpose of the process of civil recovery would be frustrated if it were not possible, in the first instance, to freeze by an interim order; and, secondly, perhaps to realise property without at the same time dealing with the interest of somebody other than the person who was alleged to be holding the proceeds of crime.
One can think of many examples, some of which were referred to by the noble Lord, Lord Goodhart, where associated property is tied up with recoverable property, the proceeds of crime, that make it necessary, in the first instance, to freeze and perhaps, in the second instance, to deal with the two together; for example, different interests in real property, leasehold and freehold, and perhaps mortgages in relation to property. There are other examples. I yield to the noble Lord, Lord Goodhart.
9 p.m.
Lord Goodhart: I am grateful to the Minister, but I would have said that freehold and leasehold interests in the same property were a pre—eminent example of a case in which it is unnecessary to realise both assets and where the realisation of one would suffice. A tenancy in common is a different case.
Lord Goldsmith: I am grateful to the noble Lord for his intervention, but the point that I was seeking to make is that there will be many instances, of which only a few have been mentioned today, in which in order to give effect to the process it will be necessary to do something in relation to the associated property either at the interim receiving order stage or at the second stage.
Without going into detail, I want to emphasise that it is of course important—and the Bill so provides—that there are safeguards for those who have the associated property. The Government's difference of opinion with the noble Lord concerning his amendment is simply a question of whether the safeguards already in the Bill, which rely on the discretion of the court, are themselves entirely satisfactory. I suggest that they are.
Let me make clear what I have in mind. First, we would not expect proceedings to be brought in respect of non—recoverable property unless the enforcement authority considered it proportionate to do so, taking into account all the circumstances, including how best to satisfy any right it has to recover the recoverable property. There is no purpose in the enforcement authority proceeding unnecessarily in relation to associated property.
But if the enforcement authority makes an application—we are now considering the receiving order stage—it will be for the court to decide in accordance with its discretion what property is to be covered by the order. I—and, I should think, the noble Lord—would not expect any court to include associated properties in the order unless it saw a case for doing so. But it does not end there, because Clause 260(2) explicitly provides that:
"The court may vary an interim receiving order so as to exclude from the property to which the order applies any property which is … associated property if the court thinks that the satisfaction of any right of the enforcement authority to recover the property obtained through unlawful conduct will not be prejudiced".
I suggest that that entirely meets the noble Lord's point, in the sense that the court can on an application made to vary—which can be issued shortly after the order has been made—the order so as to exclude property if, in the court's view, it will not prejudice the right to recovery. The Bill provides that when an order in relation to associated property is made, the owner of that associated property should receive notice.
Our view is therefore that it is unnecessary-indeed, it is inappropriate-to insert in the Bill the specific test proposed by the noble Lord. It is better to leave it to the discretion of the court and the test referred to in Clause 260(2). But I need to go further than that, because it is then necessary to consider the position at the next stage, which is when an order is made in

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relation to recoverable property at the final stage, as it were, of the proceeding, when the court decides that it is recoverable property.
Clauses 274 and 275 are pertinent here. Clause 274 sets out a provision to deal with those cases—we may anticipate that they may be frequent—where there is an agreement between the enforcement authority and the person who holds the associated property about how to go about realising the recoverable property without prejudicing the interests of the associated property. One distinct possibility if the property cannot be divided up or separated will be that one person simply buys the other person out. If there is no agreement, Clause 275 sets out what should be the process, which is then for the court to make an appropriate order. As the Committee will see from Clause 275(3), that could include an order by the court that the trustee—that is, the person who will be executing and in charge of the recovered property—must pay an amount to the person who is the associated owner. Indeed, under subsection (5), there is even the possibility of compensation being payable.
Against that background, I shall deal specifically with the amendments. On Amendment No. 214, it is unnecessary to include a specific provision in the Bill—it can be left to the discretion of the court and, as I said, the interim proceeding order can be varied on application.
Amendments Nos. 220C and 223B would add a new subsection to Clause 260 that would set out in the Bill that the court has power to exclude associated property if it thinks that to include the property would unfairly prejudice the rights of the person to hold the property—if that person is not the respondent in the civil recovery proceedings. Our view is that no such provision is needed in the Bill. The court can be relied on to take into account the rights of holders of associated property and may make exclusions on a variation order.
It will be important—this is why the amendment would be wrong—to have regard to the interests not only of the owner of the associated property but of the enforcement authority. At the interim receiving order stage, the property will be the subject of dispute between the state and the holder of assets, so the court ought to be mindful of the effect of any decision that it takes on the potential outcome. As I have sought to demonstrate, it is when the court comes to make a final order that the interests of the associated owner can fairly be taken into account—either by reason of an agreement to which effect is given under Clause 274 or by reason of the provision under Clause 275 for the court to make orders.
Finally, I turn to Amendment No. 224, which would add a new subsection to Clause 275, to which I have referred. The amendment would include the provision that it was,
"not reasonably practicable to realise the recoverable property without also realising the associated property".
In making provision under Clause 275, the court is already required to have regard to the rights of any person who holds the associated property and the
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value to him of that property as well as the enforcement authority's interest. If the court makes provision for the disposal of associated property, it will give an order requiring the trustee to pay the holder an appropriate amount and/or compensation. The interests would be well protected at that stage.
The key factor is that neither the court nor the enforcement authority will have an interest in applying a recovery order to associated property if the recoverable property could be realised without undue difficulty without realising the associated property. Why should the enforcement authority pay for associated property that it does not need in order to realise the recoverable property?
Those explanations are a little complex, but I hope that they will be of assistance and will lead the noble Lord to the view that the safeguards are adequate and that he may withdraw the amendment.
Lord Goodhart: I am grateful to the noble and learned Lord for his detailed explanation. I accept that there are several safeguards, but I am not entirely satisfied that they go far enough.
The Minister said that the enforcement authority would not ask for an order relating to associated property unless it was necessary to do so. I would not have much confidence in that as a system of protection. In the nature of things, an enforcement authority is likely to ask for an order that covers associated property if it thinks that there is even a remote possibility that that might assist. The enforcement authority has what we might call a professional interest in the matter, and I would not rely on the exercise of discretion by the authority as a safeguard. The position of the court is more important.
I do not see why the owner of the associated property must go to court to ask for a variation of the original interim receiving order. We should make it clear in the Bill that the enforcement authority must make a case explaining why it is necessary for the associated property to be included in the order for the property to be effectively realised.
Lord Goldsmith: I anticipate that the noble Lord will say that he will reflect on the matter. I would expect—I imagine that he would, too—that, without there being anything in the Bill, the enforcement authority, when it asks for an interim receiving order that covers associated property, will want to be satisfied that it makes sense and that there is a good reason for doing so.
Lord Goodhart: That may be the case, but I would like to see it in the Bill. There is nothing in the wording of the amendments that would create a problem for the enforcement authority in getting an order covering associated property if the circumstances required it.

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The noble and learned Lord also referred to Clause 275(3), which obliges the trustee to,
"pay an amount to the person who holds the associated property"
when there is a sale. That is not a safeguard: it should go without saying. It would be intolerable if the trustee could take the proceeds of the sale of associated property without paying for it. The associated property is not itself criminal property. The noble and learned Lord might have referred more effectively to Clause 275(1) which says that,
"the court may make the following provision if … the court thinks it just and equitable to do so".
Once again, although the point has some force, I would prefer it to be spelt out in the Bill.
I believe that amendments of the kind I am seeking provide for the interests of the enforcement authority. They specify that if it is necessary to sell the associated property or make it subject to a receiving order so as to be able to realise in the long run the recoverable property at a proper market value, the order can cover the associated property. Therefore I see nothing which damages the proper interests of the enforcement authority.
I accept that the difference between the noble and learned Lord the Attorney—General and myself in this matter is not wide. I shall examine the issue and consider whether we need to return to it. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 254 agreed to.
Clause 255 agreed to.
9.15 p.m.
Lord Bassam of Brightonmoved Amendment No. 214A:
After Clause 255, insert the following new clause—
"REGISTRATION
(1) The registration Acts—

(a) apply in relation to interim receiving orders as they apply in relation to orders which affect land and are made by the court for the purpose of enforcing judgements or recognisances,

(b) apply in relation to applications for interim receiving orders as they apply in relation to other pending land actions.

(2) The registration Acts are—

(a) the Land Registration Act 1925 (c. 21),

(b) the Land Charges Act 1972 (c. 61), and

(c) the Land Registration Act 2002 (c. 9).

(3) But no notice may be entered in the register of title under the Land Registration Act 2002 (c. 9) in respect of an interim receiving order.
(4) A person applying for an interim receiving order must be treated for the purposes of section 57 of the Land Registration Act 1925 (c. 21) (inhibitions) as a person interested in relation to any registered land to which—

(a) the application relates, or

(b) a restraint order made in pursuance of the application relates."

The noble Lord said: This is a set of technical amendments. Amendment No. 214A provides for the registration of interim receiving orders in the Land
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Registry for England and Wales. That is to ensure that such orders are registered as pending land actions. Amendment No. 292X is consequential. We intend to make similar provision for Northern Ireland at the Report stage.
Amendments Nos. 220D, 220E, 223C and 223D are designed to ensure that interim and final recovery orders are properly registered under Scottish procedure.
As presently drafted, Clause 263(1)(c) requires the interim receiver in civil recovery cases to register an interim administration order in the register of inhibitions and adjudications. There are, however, no further provisions which make it clear what is the effect of such registration.
Amendments Nos. 220D and 220E therefore set out a detailed scheme in relation to the registering of interim administration orders. In effect, it gives public notice that the property in question is subject to an interim administration order and places an inhibition on any dealing in respect of the property until such time as the Court of Session determines the outcome of the case.
Amendments Nos. 223C and 223D make similar provision for Scotland in respect of recovery orders. Clause 271(3)(b) currently places a responsibility on the trustee for civil recovery in Scotland to register the recovery order in the register of inhibitions and adjudications if it is considered necessary. The intention is to give a clear public notice that the recoverable property now vests in the trustee and inhibits anyone else from dealing with the property.
On further consideration, it is thought to be more appropriate for the clerk of the Court of Session rather than the trustee to register the order. That follows the procedure set out in the Bankruptcy (Scotland) Act 1985. Amendment No. 223C therefore removes the responsibility from the trustee and Amendment No. 223D places it on the clerk of the court. I beg to move.
On Question, amendment agreed to.
Schedule 3 [Powers of interim receiver or administrator]:
Lord Kingslandmoved Amendment No. 215:
Page 269, line 30, at end insert—
"() The order shall not permit the interim receiver or administrator to search for, inspect, copy, photograph, make a record of, take possession of or remove items subject to legal privilege.
() In this section, "items subject to legal privilege" means—

(a) communications between a professional legal adviser and his client; or

(b) communications made in connection with or in contemplation of legal proceedings for the purposes of these proceedings,

being communications which would in legal proceedings be protected from disclosure by virtue of any rule of law relating to confidentiality of communications items subject to legal privilege."

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The noble Lord said: This is another amendment inspired by the Law Society of Scotland. It ensures that the interim receiver or administrator cannot,
"search for, inspect, copy, photograph, make a record of, take possession of or remove items subject to legal privilege".
The noble Earl, Lord Mar and Kellie, might like to note that, on this occasion, the amendment utilises the verb "shall" and not "must".
As the Committee is aware, Article 8 of the European Convention on Human Rights enshrines the right to privacy. The doctrine of legal professional privilege protects the relationship between a solicitor and his or her client. In order to preserve that relationship, we believe that provision should be made on the face of the Bill to the effect that the powers discharged by the interim receiver or administrator under paragraph 3 of Schedule 3 will not extend to the disclosure of information subject to legal privilege.
The amendment also provides for a definition of legal privilege which is consistent with that given in Clause 406 of the Bill. I beg to move.
Lord Bassam of Brighton: I do not know whether it is because the noble Lord, Lord Kingsland, has got the wording right on this occasion, but I have some goodish news for him on this amendment. Because of concerns raised in Committee in the other place, we amended the schedule to make explicit that the duty to disclose information imposed by paragraph 2 of the schedule should not impinge on information subject to legal professional privilege.
The amendment raises a similar concern in respect of paragraph 3 of the schedule. As the noble Lord knows, that paragraph provides that the court may authorise the interim receiver or administrator to enter, search, copy, photograph or record anything which is described in the interim receiving or administration order, or to seize evidence in pursuance of the order.
It is our intention that these powers should respect legal privilege. We will need to reflect on some of the points made by the noble Lord in his entirely convincing peroration and consider whether the current drafting of paragraph 3 secures our policy. In the light of those kind comments, perhaps the noble Lord will feel able to withdraw his amendment.
Lord Kingsland: I hasten to do so. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 3 agreed to.
Clause 256 agreed to.
Clause 257 [Supervision of interim receiver and variation of order]:
Lord Bassam of Brightonmoved Amendment No. 215A:
Page 151, line 13, leave out "the respondent and any other" and insert "any party to the proceedings and any"
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The noble Lord said: Amendments Nos. 215A to 215D are intended to put beyond any reasonable doubt that all persons with an interest in the supervision or variation of an interim receiving order have rights to make an application to the court or to be heard as appropriate. Amendments Nos. 220F to 220J do the same for the Scottish provisions on interim administration orders.
Amendments Nos. 220A and 220B will ensure that where there are other legal proceedings taking place in relation to the same property to which an interim receiving order applies, all parties to both sets of proceedings will have a right to be heard before the court makes a decision. Amendment No. 223A does exactly the same for Scotland.
It was always our intention to ensure that all those with an interest in a court's consideration of an interim receiving order or an interim administration order should have the right to be heard. Having looked again at the provisions in Clauses 257 and 259 and their Scottish equivalents, we were not convinced that we had got this quite right. It is for that simple reason that we have brought forward these amendments. I beg to move.
On Question, amendment agreed to.
Lord Bassam of Brightonmoved Amendments Nos. 215B to 215D:
Page 151, line 18, leave out "respondent and any other party" and insert "parties"
Page 151, line 22, leave out "doing so" and insert "exercising any power under this Chapter to vary or set aside an interim receiving order"
Page 151, line 22, leave out "respondent and any other party" and insert "parties"
On Question, amendments agreed to.
Clause 257, as amended, agreed to.
Clause 258 [Restrictions on dealing etc. with property]:
Lord Goodhartmoved Amendment No. 216:
Page 151, line 33, leave out "any person" and insert "the respondent"
The noble Lord said: I can speak to this amendment and Amendment No. 218 very briefly. Clause 258(3) gives a discretionary power to the court to allow an owner of property which is subject to a receiving order to resort to that property for living or business expenses. We accept that that is correct in the case of the respondent. However, where a person having an interest in the property is not the respondent, we believe that the right of that person to be able to have recourse to that property—or his share of that property—to cover living and business expenses should be mandatory, rather than discretionary.
Someone who has his property made subject to a receiving order, simply because it may be desirable to do so in the interests of the realisation of the recoverable property, should not be placed at risk of being unable to pay his living or business expenses—

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and, thereby, possibly face bankruptcy—because of the nature of some other persons's parallel interest in the same property. I beg to move.
Baroness Buscombe: I support the noble Lord, Lord Goodhart, in Amendment No. 216. In doing so, I shall speak to Amendments Nos. 217 and 219, together with Amendments Nos. 221 and 222, which are consequential.
Under Clause 254 of the Bill, the enforcement authority may apply to the court for an interim receiving order. This is defined as an order for,
"the detention, custody or preservation of property, and … the appointment of an interim receiver".
The interim receiver is given a number of powers that are mainly mentioned in Schedule 3 to the Bill, but he is given the specific power in Clause 256 to,
"require any person to whose property the order applies",
to do anything that he is,
"reasonably required to do by the interim receiver for the preservation of the property".
We suggest that that could be costly; indeed, very costly.
Clause 258 of the Bill allows exclusions to be made when an interim receiving order is made, or on an application to vary an existing order. Subsection (3) provides that an exclusion may,
"make provision for the purpose of enabling any person … to meet his reasonable living expenses, or … to carry on any trade, business, profession or occupation".
However, subsection (3) —and, indeed, the whole of Clause 258—is entirely silent about an exclusion for the purpose of enabling any person to meet the costs of complying with the requirements of the interim receiver for the purpose of preserving the property concerned. The specific exclusions in subsection (3) of the clause do not cover those costs. We believe that such costs should be specifically mentioned in the subsection to avoid any suggestion that those costs should not be the subject of an exclusion under Clause 258. As I have already said, Amendment No. 221 is consequential upon Amendment No. 217.
I turn to Amendment No. 219. Clause 258 allows a court to make exclusions when an interim administration order is made, or on an application to vary the order. Subsection (4) provides that,
"an exclusion may not be made for the purpose of enabling any person to meet any legal expenses in respect of proceedings under this Part".
Presumably, that is because the defendant will be able to use his unfrozen assets, or may be able to apply to the community legal service scheme or the legal aid scheme for his legal costs. However, there will be many instances where the unfrozen assets will not be sufficient and the defendant will not qualify for assistance under either of those schemes. In those circumstances, it could be unjust for that person not to have recourse to the property subject to the interim administration order. That is particularly so because such an order can be made simply because there is a
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good, arguable case for the property to which the application relates being, or including, recoverable property.
It is possible that the property to which the application for the order relates is not recoverable property, and so should be available to meet any legal expenses in respect of proceedings under this part of the Bill. That is particularly so if the defendant would otherwise be unable to afford to defend the proceedings.
If an exclusion cannot be made for the purpose of enabling any person to meet any legal expenses in respect of proceedings under Part 5, there is a serious risk of injustice if he cannot otherwise meet his legal expenses. If he is in that position, it may well be that the enforcement authority succeeds by default, or merely because the representations made on behalf of the defendant are not as good as they otherwise would have been. The result could be that the enforcement authority succeeds when it would not otherwise have succeeded merely because it has obtained an interim administration order which prevents the defendant from funding his defence.
That is a serious defect. We believe that the provision could be in breach of Article 6 of the European Convention on Human Rights, because there would not be a level playing field. The enforcement authority would have all the resources available to it to prosecute the proceedings in as efficient a manner as possible. In contrast, a defendant whose assets were frozen and who had no other available assets to fund his legal expenses would not be able to afford legal representation to defend a claim. In that sense he would not have a fair trial.
Amendment No. 222 is consequential on Amendment No. 219. I beg to move.
9.30 p.m.
Lord Goldsmith: In replying to Amendment No. 216, I shall speak also to the other amendments in the group. The underlying point relates to the provisions that prevent dissipation of property which is subject to an interim receiving order.
It is essential, if property which may ultimately be the subject of an order as recoverable property is subject to the interim procedure, that it should not be dissipated in the mean time if there is a dispute between the state and the respondent as to whether or not the property should come across to the state. However, we recognise that there are exceptions and exclusions. The question raised by these sets of amendments touches on what those exclusions should be.
I shall deal first with Amendments Nos. 216 and 218, in the name of the noble Lord, Lord Goodhart, which go together. Their effect would be to make it mandatory—to use the noble Lord's word—for the court to make provision,
"to the extent necessary for enabling any person (other than the respondent) … to meet",
the expenses described.

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I must ask the rhetorical question: in what circumstances would it be "necessary" for the court to make an exclusion when the court would not in the exercise of its discretion make that exclusion in any event? In other words, under the Bill as it stands the court will always weigh the circumstances very carefully as to whether it is appropriate to make an order in favour of the respondent to allow such expenses to be made. If it is necessary to make such an order so that the respondent should meet those particular expenses, presumably that is the order that the court would make under its discretion in any event. So, to introduce an explicit test of necessity seems inappropriate and indeed would introduce an unnecessary degree of rigidity into the process. Again, the court can be left, as a matter of its discretion, to make the order, and particularly in the circumstances envisaged in the noble Lord's amendment.
Amendment No. 217 and the consequential Amendment No. 221, spoken to by the noble Baroness, Lady Buscombe, deal with the costs of anything that a person is reasonably required to do by the interim receiver for the preservation of the property. If the interim receiving order requires a person to do something in relation to the property and its preservation, it will clearly be in the mind of the court that it will be necessary for that person to have access to sufficient funds to comply with that requirement. Whether that required the making of an exclusion would depend on the court's view of all the circumstances, no doubt including what other assets were available to that person, rather than using the property that was subject to the receiving order, which would sometimes be very difficult, because it might require the sale of an asset in order to realise it.
We are confident that it is not necessary on the face of the Bill to draw to the court's attention that if it makes an order requiring somebody to do something in relation to the property, it needs to consider whether the funds or assets will be available for that to be done. In any event, as the clause stands the court has a discretion as to what exclusions to make. Subsection (3) identifies certain specific exclusions, but it is not an exhaustive list of the exclusions that could be made. The court would be able to make an exclusion for the purpose that the noble Baroness intends if it thought that appropriate. If the amendment were passed, the court would not be obliged to make the exclusion in any event. The amendment does not seem necessary or appropriate.
I hope it is of some comfort to the noble Baroness that under Schedule 3 the interim receiver will have the power to seize and manage the property to which the interim receiving order relates. He will have the power to incur capital expenditure in respect of the property. I envisage that the receiver rather than the property holder will often—I do not say always—incur the main expenditure in relation to the preservation of property. Those are our reasons for resisting Amendment No. 217.
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Amendment No. 219 deals with a different point. It is an important point that we have touched on before at Second Reading and, I think, in Committee. It relates to the availability of the proceeds of the property that is frozen for the purpose of meeting legal expenses. I would be the last person to suggest that legal expenses were not a desirable way of spending property, but I also recognise that they can be quite substantial.
The problem—which arises in all applications for freezing orders, and in other areas as well—is whether the property is used to meet the legal costs or whether one looks to other funds. The Government have gone for the option that either the respondents and third parties should meet legal costs from assets that were not subject to the interim receiving order—in other words, that property is not dissipated by legal costs—or, where they have insufficient assets to do that, their legal costs should be publicly funded.
It is appropriate to say a word about the nature of that legal funding. The noble Baroness touched on the legal aid arrangements. Funding will be made available to respondents and third parties in civil recovery proceedings. In order to be granted public funding, they will need to satisfy a means test and a merits test. Parties to civil recovery proceedings will need to meet the standard means test, but the standard merits test will be relaxed to the extent necessary to ensure that everyone has access to legal funding who needs it and who qualifies financially. So there should not be a problem because the legal costs should be met either out of assets which are not subject to the receiving order or through legal aid with the adjustment to the merits test to which I have referred. I hope that that will be welcomed by the Committee.
If the director loses the case, the court will be able to order him to pay the respondent's legal costs. That will be towards the end of the process but it is still a very important procedure. Compensation is also payable under provisions in the Bill to which we shall come later.
I hope that the noble Baroness will accept that her fear that the enforcement authority may be able to win the case simply through preventing the respondent or third party having access to the right lawyers to fight it is not well founded. That has been thought about properly by the Government and the process, including the adjustment to the merits test to which I have referred, will be used to ensure that that does not happen.
Those are my responses to the amendments, which I hope will not be pressed.
Lord Goodhart: I shall consider the noble and learned Lord's remarks. It may be that we shall decide not to press the matter further. However, if the noble Baroness's amendments should come back, particularly Amendment No. 219—we have supported similar amendments in relation to confiscation

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orders—it may well be that we will support them. But that is not a matter for me. I beg leave to withdraw Amendment No. 216.
Baroness Buscombe: I thank the noble and learned Lord the Attorney-General for his response to Amendments Nos. 217 and 219. With regard to Amendment No. 217, I am not sure that I share his confidence. I heard what he said in regard to the fact that Clause 258(3) is not exhaustive. However, it would be preferable for that to be made clear on the face of the Bill. I shall consider the matter again, along with Schedule 3, and read in Hansard what the noble and learned Lord said.
As to Amendment No. 219, I again heard what the Attorney-General said in regard to the availability of proceeds that are the subject of freezing orders to meet legal expenses in respect of proceedings under Part 5. We have had considerable consultation with both the Bar Council and the Law Society of England and Wales with regard to this matter in Part 5 and also in relation to confiscation orders. It is a matter of some considerable concern. We were not entirely content with the response we were given on similar amendments in respect of confiscation orders. We shall think carefully about whether or not to return to this point at Report stage. I thank the noble Lord, Lord Goodhart, for his support.
Amendment, by leave, withdrawn.
[Amendments Nos. 217 to 219 not moved.]
9.45 p.m.
Baroness Buscombemoved Amendment No. 220:
Page 151, line 39, leave out subsection (5).
The noble Baroness said: Clause 258 deals with exclusions from an interim administration order. Subsection (3) provides that an exclusion may make provision for a person to meet his reasonable living expenses or to carry on any trade, business, profession or occupation. Subsection (5) provides that if the excluded property is not specified in the order, it must be described in the order in general terms. There is no suggestion in Clause 258 that any property can be excluded.
Clause 260 deals with the exclusion of specific property if for example the court decides that property to which an interim administration order applies is neither recoverable property nor associated property. We suggest that, logically, subsection (5) should not be included in Clause 260 but should be included in Clause 258. Furthermore, we suggest that it would be quite wrong to describe excluded property in general terms because any interim administration order must be sufficiently clear so that any person reading it must know precisely what he can or cannot do. If he is in breach of the interim administration order, he is guilty of contempt of court. He must therefore know with certainty what property is subject to the interim administration order and what property is excluded from it. We have therefore sought to remove subsection (5) from Clause 258 but have not put it into Clause 260 where it otherwise would go.
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Amendment No. 223 is consequential to Amendment No. 220. I beg to move.
Lord Goldsmith: Clause 258 makes a simple and practical provision. Its purpose is to allow property which is excluded to be identified in a sensible way. I agree with the noble Baroness, Lady Buscombe, that it would be inappropriate for an order to be made in such vague or imprecise terms that it was not certain which property was being excluded, for the very reasons that she gave. However, the provision that the property must be described in the order in general terms if it is not specified in the order would not permit the property to be specified in terms that were vague or imprecise and therefore lead to the type of uncertainty that both she and I want to avoid.
"General" does not mean uncertainty. It simply means that the order need not be turned into an unwieldy list, as might otherwise be thought to be the position. We would not want to produce unnecessarily difficult and bureaucratic orders. Therefore, a generic description can be given. Of course it will need to be sufficiently certain and precise. However, it might, for example, allow for the release of a sum of money without having to specify which notes or coins that should entail. That must be sensible. That is the reason for the inclusion of the subsection. We hope that, with that reassurance, the noble Baroness, Lady Buscombe, will feel able to withdraw the amendment.
The noble Baroness also suggested that there should be something more in Clause 260. However, 11 am afraid that I did not follow the point and cannot help her on what is missing and, if so, why it is missing. We think that the substantial point is that, when the interim receiving order is made and if exclusions are made, it should be sufficiently clear what the excluded property is. However, that can be defined in general terms, and there is no need to add anything to Clause 260. However, if I have misunderstood the point, I would be happy to be further illuminated.
Baroness Buscombe: I thank the Attorney-General for his response, and I shall read carefully what he had to say. On that basis, l beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 258 agreed to.
Clause 259 [Restriction on proceedings and remedies]:
Lord Goldsmithmoved Amendments Nos. 220A and 220B:
Page 152, line 12, leave out subsection (3).
Page 152, line 20, at end insert—
"() Before exercising any power conferred by this section, the court must (as well as giving the parties to any of the proceedings in question an opportunity to be heard) give such an opportunity to the interim receiver (if appointed) and any person who may be affected by the court's decision."
On Question, amendments agreed to.
Clause 259, as amended, agreed to.
Clause 260 [Exclusion of property which is not recoverable etc.]:
[Amendment No. 220C not moved.]
Clause 260 agreed to.
Clauses 261 and 262 agreed to.
Clause 263 [Functions of interim administrator]:
Lord Goldsmithmoved Amendment No. 220D:
Page153, line 42, leave out paragraph (c).
On Question, amendment agreed to.
Clause 263, as amended, agreed to.
Lord Goldsmithmoved Amendment No. 220E:
After Clause 263, insert the following new clause—
"INHIBITION OF PROPERTY AFFECTED BY ORDER
(1) On the application of the enforcement authority, the Court of Session may, in relation to the property mentioned in subsection (2), grant warrant for inhibition against any person specified in an interim administration order.
(2) That property is heritable property situated in Scotland to which the interim administration order applies (whether generally or such of it as is specified in the application).
(3) The warrant for inhibition—

(a) has effect as if granted on the dependence of an action for debt by the enforcement authority against the person and may be executed, recalled, loosed or restricted accordingly, and

(b) has the effect of letters of inhibition and must forthwith be registered by the enforcement authority in the register of inhibitions and adjudications.

(4) Section 155 of the Titles to Land Consolidation (Scotland) Act 1868 (c. 101) (effective date of inhibition) applies in relation to an inhibition for which warrant is granted under subsection (1) as it applies to an inhibition by separate letters or contained in a summons.
(5) The execution of an inhibition under this section in respect of property does not prejudice the exercise of an interim administrator's powers under or for the purposes of this Part in respect of that property.
(6) An inhibition executed under this section ceases to have effect when, or in so far as, the interim administration order ceases to apply in respect of the property in relation to which the warrant for inhibition was granted.
(7) If an inhibition ceases to have effect to any extent by virtue of subsection (6) the enforcement authority must—

(a) apply for the recall or, as the case may be, the restriction of the inhibition, and

(b) ensure that the recall or restriction is reflected in the register of inhibitions and adjudications."

On Question, amendment agreed to.
Clause 264 agreed to.
Clause 265 [Supervision of interim administrator and variation of order]:
Lord Goldsmithmoved Amendments Nos. 220F to 220J:
Page 154, line 32, leave out "the respondent and any other" and insert "any party to the proceedings and any"
Page 154, line 37, leave out "respondent and any other party" and insert "parties"
Page 154, line 41, leave out "doing so" and insert "exercising any power under this Chapter to vary or set aside an interim administration order"
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Page 154, line 41, leave out "respondent and any other party" and insert "parties"
On Question, amendments agreed to.
Clause 265, as amended, agreed to.
Clause 266 [Restrictions on dealing etc. with property]:
[Amendments Nos. 221 to 223 not moved.]
Clause 266 agreed to.
Clause 267 [Restriction on proceedings and remedies]:
Lord Goldsmithmoved Amendment No. 223A:
Page 155, line 29, leave out subsection (3) and insert—
"(3) Before exercising any power conferred by this section, the court must (as well as giving the parties to any of the proceedings in question an opportunity to be heard) give such an opportunity to the interim administrator (if appointed) and any person who may be affected by the court's decision."
On Question, amendment agreed to.
Clause 267, as amended, agreed to.
Clause 268 [Exclusion of property which is not recoverable etc.]:
[Amendment No. 223B not moved.]
Clause 268 agreed to.
Clauses 269 and 270 agreed to.
Clause 271 [Functions of the trustee for civil recovery]:
Lord Goldsmithmoved Amendment No. 223C:
Page 157, line 16, leave out paragraph (b).
On Question, amendment agreed to.
Clause 271, as amended, agreed to.
Lord Goldsmithmoved Amendment No. 223D:
After Clause 271, insert the following new clause—
"RECORDING OF RECOVERY ORDER: SCOTLAND
(1) The clerk of the court shall immediately after the making of a recovery order which relates to heritable property situated in Scotland send a certified copy of it to the keeper of the register of inhibitions and adjudications for recording in that register.
(2) Recording under subsection (1) shall have the effect, as from the date of the recovery order, of an inhibition at the instance of the trustee for civil recovery against the person in whom the heritable property was vest prior to that date."
On Question, amendment agreed to.
Schedule 4 agreed to.
Clause 272 [Rights of pre-emption, etc.]:
Lord Goldsmithmoved Amendment No. 223E:
Page 157, line 40, at end insert—
"() References to rights in subsections (2) and (3) do not include any rights in respect of which the recovery order was made."
The noble and learned Lord said: This amendment proposes a minor clarification to Clause 272. The clause makes certain provisions to ensure that a recovery order will have effect even if it conflicts with other proprietary rights that would prevent, penalise or restrict the vesting of the property concerned. It sets out certain protections in respect of such rights.

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The amendment makes clear that the protections provided for any such right do not apply if the right itself is the subject of a recovery order. I beg to move.
On Question, amendment agreed to.
Clause 272, as amended, agreed to.
Clauses 273 and 274 agreed to.
Clause 275 [Associated and joint property: default of agreement]:
[Amendment No. 224 not moved.]
Clause 275 agreed to.
Clauses 276 to 284 agreed to.
Clause 285 [Other exemptions]:
[Amendment No. 224A not moved.]
Clause 285 agreed to.
Clause 286 [Compensation]:
[Amendment No. 225 not moved.]
Baroness Buscombemoved Amendment No. 226:
Page 166, line 40, at end insert "unless within that period the enforcement authority appeals against the decision, in which case the application for compensation must be made within the period of three months beginning with the date on which the appeal is determined or otherwise disposed of"
The noble Baroness said: Clause 286 provides for the payment of compensation to a person whose property is subject to an interim receiving order or an interim administration order, and it turns out that the property is not recoverable property or associated property. Such a person has a right to apply for compensation if he suffers loss as a consequence of the interim receiving order or the interim administration order. However, if he wants to be paid compensation, he must apply within a very short period. He has only three months from the decision of the court that no recovery order should be made in respect of the property. That is a very short period because the person applying for compensation may well be an innocent third party; but we can live with that.
However, if the enforcement authority appeals the decision that no recovery order should be made in respect of the property, it is not entirely clear whether the period of three months runs from the date of the decision of the court of first instance or from the date of decision of any appeal court. It may well be that in relation to the person who makes the application, the period of three months runs from the decision of the appellate court. That would make sense. However, if the appeal is dismissed, it is arguable that the three-month period ran from the date of the original decision, which would still stand because the appeal was dismissed. The person who makes the application would therefore have lost his right to compensation because he acted sensibly in not making the application until the appeal had been dismissed.
In order to avoid that injustice, we feel that subsection (3) should make it clear that where there is an appeal, the three—month period runs from the decision of the appellate court and not from the decision at first instance. I beg to move.
Lord Goldsmith: Of course we accept that the time should not run out while an appeal is taking place; it
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should run from the time when the appeal is determined. There is nothing between the noble Baroness and us on that. The question is whether the amendment is necessary in order to achieve that, having regard to the words that are already used. I propose, if I may, that we take the proposal away. I accept that similar wording to that which she proposed is used in certain legislative provisions. We shall consider whether it would be sensible to put that issue beyond doubt, notwithstanding the existing wording. I hope that the noble Baroness will accept that gift at 10 o'clock in the evening!
Baroness Buscombe: I thank the noble and learned Lord the Attorney-General. I hope that he will respond positively—he has already begun to—not least because the amendment was suggested to me by a very experienced member of the Chancery Bar. I suggest that it makes sense that the matter should be made clear beyond doubt in the Bill. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10 p.m.
Lord Kingslandmoved Amendment No. 227:
Page 167, line 13, at end insert—
"() If any person other than the person referred to in subsection (1) has suffered loss as a result of any interim receiving order or interim administration order, that other person may make an application to the court for compensation.
() If the court is satisfied that such other person has suffered loss as a result of the interim receiving order or interim administration order, it may, if it thinks fit, require the enforcement authority to pay compensation to him."
The noble Lord said: Clause 286 gives a right to a person whose property is subject to an interim receiving order or interim administration order to apply to the court for compensation in the event that the court decides that the property is not recoverable property or associated property. As many Members of the Committee will recognise, that approach is based on the usual undertakings to damages normally given as a condition of a grant of an interim order in the civil courts. In brief, if a person applies for an interim order but should not have been granted that order, he should have to pay compensation to whoever has suffered loss as a consequence of the order. It is the fair quid pro quo for the order being granted without going into the facts of the case at a trial.
However, in the standard freezing order, it is usual to give an undertaking to pay the costs of any third party who has suffered loss if the court decides that the third party should be compensated for that loss. That is a standard undertaking extracted from an applicant for a freezing order in a civil court.
An interim receiving order or an interim administration order is a more drastic remedy than a freezing order. We believe that, at the very least, there should be a similar provision for compensation as regards innocent third parties who have suffered loss as a result of an interim receiving order or an interim administration order.

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I emphasise that the right to compensation should not be automatic. Innocent third parties may suffer loss as a result of interim receiving orders or interim administration orders; but not all of them should be entitled to compensation regardless of the circumstances. They may be the authors of their own misfortune, and it would be wrong to impose an unlimited liability on an enforcement authority carrying out a public duty regardless of the circumstances. Compensation should be payable only where the court thinks fit. That is why the amendment is worded in the way that it is. I beg to move.
Lord Thomas of Gresford: In supporting Amendment No. 227, moved by the noble Lord, Lord Kingsland, I wish to speak also to Amendment No. 228, which raises the question of compensation in perhaps a narrower way. This issue was raised by my noble friend Lord Goodhart during debate on an earlier part of the Bill, but we return to it. The answer given at that time was that an unsecured creditor takes many risks upon himself whenever he enters into a contractual arrangement with another person. Of course, such a person is normally competing with other interests—sometimes with secured creditors; sometimes with other unsecured creditors—and he receives his share of the pot only if there is a pot available at the end of that time.
This is a different situation. In this situation, the state steps in and recovers money or property by way of a punishment with the prospect of terms of imprisonment in default. Presumably the property recovered by the state goes to the state's coffers and not to the unsecured creditor, who, by definition under the terms of the amendment, is a completely innocent party. The unsecured creditor here is the one to whom the debt is owed. Again, by definition in the amendment, the debt was incurred when the applicant had no reason to believe that a recovery order could be made against the respondent. He is an innocent party. I fail to see the logic of the tradesman or the person who is engaged in business in an innocent manner losing out while the state gains all the property that is recoverable. It may be that the unsecured creditor takes risks, but that is one risk that he ought not to take.
Lord Goldsmith: This matter has been the subject of previous discussion. The position remains that the Government do not support the principle behind the amendment. There is a difference between us. The view of the Government is that the effect would be highly prejudicial to civil recovery proceedings. I shall explain both of those points.
It is appropriate to distinguish between different categories of people who may, in theory, be affected by an order that is made. The position of a respondent is covered by the Bill as it stands and a secured creditor will be protected because associated property will be protected like any other associated property, as we have discussed. The Bill also recognises the third
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category, which is the prior claims of preferential debts. They receive priority over civil recovery. Those categories are dealt with.
The remaining issue is that of unsecured creditors. The proposal behind the amendment is that unsecured creditors also should take priority over the settlement of the recovery order. The Government's view is that they should not. That is the effect of the amendment.
We note that the director will seek to recover the proceeds of unlawful conduct to prevent and to disrupt organised crime. The director will be acting on behalf of the state in cases where there may be no identifiable victim. The underlying principle is that the person in possession of the proceeds of unlawful conduct should not be able to retain that wealth on the basis that it never properly belonged to him. The unsecured lender inevitably exposes him or herself to a wide range of risks. I respectfully differ from the noble Lord, Lord Thomas of Gresford. The fact that the borrower may be subject to a recovery order is but one of those risks to which an unsecured lender puts himself. The borrower or the recipient of goods or services may turn out to be insolvent; he may die without leaving an adequate estate; or he may simply default.
The amendment also overlooks the fact that the making of the recovery order does not absolve the respondent of the obligation to pay his debts. They remain payable out of other property. It will probably be relatively unusual to have a case where the civil recovery results in insolvency of the respondent. The fact that the unsecured lender may lose out is simply a consequence of the fact that he has provided services on credit to someone who turns out not to be sufficiently solvent.
The second point is that this amendment would have an adverse effect in practical terms on the operation of an effective civil recovery system; it would simply invite claims from bogus creditors who, in reality, were associates of the respondent. We are entirely unpersuaded by suggestions previously made in relation to Part 2 that it would be easy to differentiate bogus compensation claims from legitimate claims. For practical reasons, therefore, and also for reasons of principle, the amendment is opposed.
Amendment No. 227 raises some of the same issues as Amendment No. 228. It deals particularly with losses arising out of the making of an interim receiving order rather than the making of a final recovery order. Again, it would clearly bite on the position of unsecured creditors who might try to show that they had suffered a loss as the result of the making of an interim receiving order. But it would potentially go further. It would be open to any person to allege loss and that may include anyone who tried to argue that a proposed joint venture, for example, had been prevented by the interim receiving order.
I also beg to differ from the noble Lord, Lord Kingsland, in suggesting that it is common place that an undertaking in ordinary civil proceedings is given by someone who obtains an injunction in favour of all third parties. My recollection—I am always ready to stand corrected about this—is that the normal order is

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that the undertaking as to damages is given in favour of the respondent. In the short time since the noble Lord made the point I managed to obtain a copy of the practitioner's bible, which appears to set out the specimen order for an interim injunction and which includes an undertaking in these terms:
"If the court later finds this order has caused loss to a respondent and decides that the respondent should be compensated for that loss, the applicant will comply with any order the court may make".
If that is right, that appears to limit it, as is my recollection, to the position of the respondent and not of third parties generally. But whether or not that be right, for the reasons I have given we oppose the amendments and hope that they will not be pressed.
Lord Thomas of Gresford: Before the noble Lord, Lord Kingsland, replies to his amendment, perhaps I may say that our Amendment No. 228 envisages, in Clause 2(a), that the respondent is wholly or in part unable to repay the debt. So it is taken as a condition that he cannot pay out of other property, which deals with the first point made by the noble and learned Lord.
Secondly, I find it extraordinary that the noble and learned Lord comes to the conclusion that the court cannot decide an issue as to whether or not a claim is made fraudulently. That is what courts are for.
Lord Goldsmith: Would the noble Lord agree that the problem with this sort of claim is that the only two people who would know the truth would be the person against whom the recovery order had been made and the person claiming to be a creditor? If there is collusion between them, it would be extremely hard for anyone else to discover that fact.
Lord Thomas of Gresford: I am afraid the courts are making decisions on the credibility of witnesses who come before them day after day in every sort of case. That is what their job is.
I come to my third point. Suppose a criminal uses the funds he has accumulated to build a house. He employs a reputable builder to do that, an architect, solicitors and so on, to whom he owes various fees and costs. Along comes the state and takes the building that has been constructed. Anybody who has quite innocently been involved in the construction of that building, in whatever way, can whistle for his money. It is a question of principle; whether the state should simply add to its coffers or whether people who have genuine claims should be able to recover them where the respondent is wholly or in part unable to repay the money that is owed.
This is a matter to which we shall return because it is a question of principle.
Lord Kingsland: Far be it from me to engage the noble and learned Lord on the subject of civil remedies in general and interim injunctions in particular. But, in my submission, I made a distinction between "the" interim injunction generally and freezing orders in particular, which are a subclass of that category. I shall
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go away and refresh my memory from the White Book. I shall probably return to the matter on Report but, meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 286 agreed to.
[Amendment No. 228 not moved.]
Clauses 287 to 290 agreed to.
Clause 291 [Searches]:
Baroness Buscombemoved Amendment No. 229:
Page 170, line 27, leave out "which"
The noble Baroness said: I shall be extremely brief in moving Amendment No. 229 and in speaking to Amendment No. 230. Simply put—it concerns a small, technical point—we believe that the word "which" is in the wrong place. We suggest that the noble and learned Lord considers subsection (1), where it is in the correct place. I beg to move.
Lord Goldsmith: A hit, a very palpable hit. I recommend that the Committee accepts the amendment.
On Question, amendment agreed to.
Baroness Buscombemoved Amendment No. 230:
Page 170, line 28, at beginning insert "which"
On Question, amendment agreed to.
Clause 291, as amended, agreed to.
Clause 292 [Prior approval]:
Lord Kingslandmoved Amendment No. 231:
Page 171, line 20, leave out from "officer" to end of line 21.
The noble Lord said: This is a further amendment inspired by the Law Society of Scotland. It would ensure that the powers conferred by Clause 291 could be exercised only with the prior approval of a judicial officer. The amendment is designed to ensure that the provisions of Chapter 3 of Part 5 are compliant with the European Convention on Human Rights. Clause 292, as drafted, would allow a judicial officer or a specified senior officer to grant approval for the searches referred to in Clause 291.
Article 8 of the European Convention on Human Rights makes specific provision for the right to privacy and sets out the occasions on which interference with that right can be justified. In the case of searches of property by officials for the purposes of detection and prosecution of serious crime, the European Court of Human Rights has held that in order to satisfy the test of being,
"necessary in a democratic society",
so as to justify the exception under Article 8(2) of the ECHR, prior authorisation by a judge would normally be required. A French law that lacked a safeguard of that type was condemned by the court in the case of Funke v France because it allowed the authorities exclusive competence to determine the scale, the frequency and length of searches in each case.

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The powers under Clause 291 are being invoked not for the purposes of detection or prosecution of crime but rather for civil proceedings. While the use of such powers could be justified on the basis of another exception contained in Article 8(2), there may be merit in ensuring that the appropriate approval is given by a judicial officer only and not by a senior officer as currently provided by the Bill. That may assist in ensuring that a challenge on that basis would be avoided in subsequent proceedings. I beg to move.
Lord Goldsmith: This is the first amendment arising from Chapter 3. It relates to the two search powers provided. The first is the power to search premises for cash. It does not include a new power of entry; the customs officer or constable must be on the premises lawfully in the first instance. There is also the power to search persons.
The noble Lord, Lord Kingsland, referred to the approvals necessary before those powers can be exercised. It is right to note, first of all, that the powers can be exercised only in certain conditions set out in Clause 291. For example, the powers must be exercised,
"only so far as reasonably required for the purpose of finding cash"
and
"are exercisable by a customs officer only if he has reasonable grounds for suspecting that the unlawful conduct in question relates to an assigned matter".
There are other requirements, including those in Clause 291(2) that the customs officer or constable must have,
"reasonable grounds for suspecting that a person … is carrying cash which is recoverable property"
and,
"is not less than the minimum amount".
There are safeguards already built in.
The normal situation would be that if it were practicable to obtain judicial approval before exercising the powers, that is what would happen. Clause 292 provides for that. The powers may be exercised only with the "appropriate approval", unless it is not practicable to obtain that approval in the circumstances. The "appropriate approval" means the approval of a judicial officer or—only if that is not practicable—the approval of a senior officer.
It would be only in circumstances where it was not practicable to obtain approval from a judicial officer that the other route would be taken. One can envisage a situation in which officers are lawfully on premises and it comes to their attention that there may be cash that is recoverable property—the proceeds of unlawful conduct or cash to be used for unlawful conduct—on those premises. There may simply not be time for the officers to leave the premises, go before a magistrate and obtain an order. The officers' purpose would be frustrated if that delay were to take place. The cash would not be there by the time that the order had been obtained.
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The Bill provides that, in such circumstances, the approval of a senior officer may be sought. It is right to say that there is the possibility that even that may not be practicable, although one envisages that that would be an unusual situation. Normally, a telephone call to the senior officer would achieve the purpose. Although senior officer approval is, of course, not judicial approval, it provides an operational safeguard in the majority of cases in which it is not practicable to get such judicial approval, as noble Lords will agree. Indeed, it will provide an operational safeguard in all cases in which it is not possible to get judicial approval but in which the approval of the senior officer is sought.
It does not stop there. If the power is exercised, the consequence will be either that cash will be detained or it will not. If it is, the matter must come before the magistrates whether approval was sought in advance or not. The magistrates will be in a position to examine the circumstances in which the order was obtained. If they are unhappy and think that judicial approval could have been obtained but was not, they will, at the very least, have something to say about that.
We have also envisaged a situation in which cash is not detained. To ensure that, even in that case, there is a further safeguard, there is an obligation set out in Clause 292. Subsection (6) provides that if no cash is seized, or if it is not detained for more than 48 hours making it unnecessary to go to a magistrate, the person who exercised the powers must give a written report to the "appointed person". That is a senior and independent person who will receive a report and will under Clause 293 be under an obligation to submit a report each year on, according to subsection (2),
"his opinion as to the circumstances and manner in which the powers conferred by section 291 are being exercised in cases where the customs officer or constable who exercised them is required to give a report".
In circumstances in which it is not practicable to obtain judicial approval, that is a very good set of safeguards which come as close as one can to the problem. It is a senior officer and either the matter goes before the court because of detention or there must be a report to the appointed officer. The appointed officer will then make an annual report. I hope that the noble Lord will agree that that provides a strong measure of operational safeguard against abuse of the powers. I also hope that with that explanation and reassurance the noble Lord will feel able to withdraw the amendment.
Lord Kingsland: I thank the noble and learned Lord the Attorney-General for that full explanation of the thinking which lies behind Clause 292. I accept from what he said that the Government have been alive to the issue I have raised. Bearing in mind the practical difficulties which might sometimes arise in locating a judicial officer, the Government have probably done the best they can to provide a series of substitute procedures. In those circumstances, I shall not be raising the matter at Report stage, and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 232 not moved.]
Clause 292 agreed to
Clause 293 agreed to.
Clauses 294 to 299 agreed to.
Clause 300 [Forfeiture]:
[Amendments Nos. 233 to 235 not moved.]
Lord Goodhartmoved Amendment No. 236:
Page 175, line 35, leave out "or sheriff"
The noble Lord said: For reasons which are not entirely clear to me, the noble Lord, Lord Rooker, has put his name to the amendment. Therefore, perhaps I had better move it and hear what the noble and learned Lord has to say. I beg to move.
Lord Goldsmith: I received a note earlier in the evening indicating the hope that this would not have been noticed! My noble friend's name appears on the amendment as a result of an error. At one stage, another, substantive, amendment was being proposed and this amendment was part of it. I am afraid that I must disappoint the noble Lord and say that I resist the amendment, notwithstanding the existence of my noble friend's name to it.
Lord Goodhart: In that case, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10.30 p.m.
Lord Goodhartmoved Amendment No. 236A:
Page 175, line 35, at end insert—
"() The court of sheriff shall state the reason for making or refusing to make an order or an application under this section."
The noble Lord said: Amendment No. 236A does not appear in the list of groupings, but that must be as a result of an oversight. It has not been debated previously and it raises a brief point.
Earlier today I spoke to a large group of amendments, the purpose of which was to transfer the forfeiture jurisdiction relating to cash only from the magistrates' court, or in Scotland, the sheriff's court, to the High Court or the Court of Session. That proposal was not accepted. Amendment No. 236A is tabled on the assumption that those amendments were not going to be accepted and did not form part of the Bill. The effect of the amendment is to require the magistrates' court or the sheriff's court, when it receives an application for forfeiture, to give its reasons for making or refusing to make the order. It seems to me that should be done.
Had the jurisdiction been transferred to the High Court or the Court of Session, then it would have followed as a matter of course that, certainly in the case of the High Court, reasons would have been given. Except for certain interlocutory decisions the High Court always gives reasons. That is not the case with magistrates' courts. I cannot speak as to what the case may be with sheriffs' courts in Scotland. Magistrates' courts are relatively unaccustomed to
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giving reasons, but it is essential that they should do so in cases of this kind where it is more than likely that very large sums of money are involved. It would be appropriate that the court which hears the appeal from the magistrates should know why the court reached its decision. I beg to move.
Lord Goldsmith: The amendment would place on the face of the Bill an obligation on the court to state its reasons for making a decision on a forfeiture hearing. I suggest that a court these days would state its reasons and it would be expected to do so. Under the current cash recovery scheme in the Drug Trafficking Act 1994 where this has arisen—we have discussed it before this evening—the court, I am told, retires and returns with reasons for its decision. Indeed, I am told that they are written reasons, but I do not believe that the substance is the question of whether the decision is written, but the fact that reasons are given. We anticipate that procedures under the new scheme would be no different.
One of the consequences of the Human Rights Act has been that the giving of reasons by many courts and magistrates' courts has become much more common. I expect that the Committee will agree that that is a good thing. It is right that people should know the decisions which have been made and which affect them. The position without the need for any amendment at all is, in the Government's view, that such reasons would be given. To spell out in this provision a specific requirement might cast doubt on what might be the more general obligation in other cases. For those reasons I invite the noble Lord to withdraw his amendment.
Lord Goodhart: I welcome what the noble and learned Lord has said. It is clearly essential that reasons should be given. If it is clear that they must be given, even though that is not on the face of the Bill, the position would be sufficiently covered. I take it that what the noble and learned Lord has said would be very clear guidance to magistrates' courts and that they would be obliged to do what is required. In those circumstances I am happy to ask the leave of the Committee to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 300 agreed to.
Clause 301 [Appeal against forfeiture]:
[Amendments Nos. 237 to 239 not moved.]
Clause 301 agreed to.
Clause 302 [Application of forfeited cash]:
[Amendments Nos. 240 and 241 not moved.]
Clause 302 agreed to.
Clause 303 [Victims and other owners]:
[Amendments Nos. 242 to 247 not moved.]
Clause 303 agreed to.
Clause 304 [Compensation]:
[Amendments Nos. 248 to 253 not moved.]
Lord Goldsmithmoved Amendment No. 253A:
Page 177, line 43, leave out subsection (9).
The noble and learned Lord said: As originally drafted, the intention of the Bill was that victims should be able to obtain return of their money, but no additional compensation. The reason for this was that the loss suffered by a victim in these cases would have arisen from the original unlawful conduct, not the operation of the cash recovery scheme. Clause 304(9), as it now stands, would have achieved that result.
Clause 303, which originally applied only to victims, was amended in the other place so as to include certain other owners. Such owners had previously been unable to apply for release of detained cash, but had been able to apply for compensation. Allowing such owners to apply for release of cash under Clause 303 unintentionally brought them within the ambit of Clause 304(9). The amendment now before the Committee will rectify that error.
I should point out that the amendment also goes further. Having reconsidered the position of victims, the Government now accept that there could be circumstances in which a victim has suffered loss as a result of the proceedings, which he would not have done if the cash had been returned at an earlier stage. The framework in Clause 304 already requires the court to consider loss incurred only as a result of the proceedings under Chapter 3. Therefore, the Government are content to leave it to the courts' discretion to consider the circumstances of individual cases, and to order the payment of compensation if the circumstances warrant it. Noble Lords may wish to read my response in Hansard. I beg to move.
On Question, amendment agreed to.
[Amendment No. 254 not moved.]
Clause 304, as amended, agreed to.
Clauses 305 to 309 agreed to.
Clause 310 [General exceptions]:
Lord Goodhartmoved Amendment No. 254A:
Page 179, line 28, leave out paragraph (b).
The noble Lord said: As the Bill stands, under Clause 310(3)(b), where a judgment has been given in civil proceedings but the claimant recovers property on the basis of the defendant's unlawful conduct, the property ceases to be recoverable. However, it remains the case that, because the three conditions in paragraphs (a), (b) and (c) in Clause 310(3) are cumulative, the property remains recoverable if the claimant's claim is not based on the defendant's unlawful conduct.
This is, frankly, an extraordinary situation: where judgment has been obtained against the defendant, any payment made under that judgment remains recoverable property unless the claim is based on the specific unlawful conduct of the defendant. Unless there is something in the clause that I have not understood, it seems to me that the consequences of that are extraordinary. Plainly, a payment under a court order should be final and should not be capable of being overridden, except where there is some evidence that the judgment has been obtained as part
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of collusion to defeat the effect of a civil recovery order. Unless there is some evidence of collusion, surely payments made as a result of a civil judgment should stand and should not be recoverable from the person who obtained the judgment. I beg to move.
Lord Goldsmith: Clause 310 attempts to ensure that the schemes are proportionate and fair. If property has been transferred as a result of proceedings which are broadly akin in their function to civil recovery proceedings—that is to say that they have the equivalent effect of ensuring the property obtained through unlawful conduct cannot be peacefully enjoyed—it would cease to be appropriate for it to be the subject of a recovery order. It is important in that context that the provision in Clause 310(3)(b) remains. It is that feature which ties the property in question to similar sorts of proceedings to the recovery process.
Perhaps I may explain the matter in this way. Without paragraph (b), which is what the amendment proposes to delete, a number of examples could arise which would fit the conditions in paragraphs (a) and (c) but which would simply be inappropriate to be excluded from the general provisions of this part. For example, if property was transferred from one spouse to another as the result of divorce proceedings, that would put it beyond the reach of the director no matter how collusive the proceedings may have been, or indeed how deliberately evasive the arrangement. It would be a payment made to the claimant or property obtained in pursuance of a judgment in civil proceedings.
Let us take another example. The criminal owner of recoverable real property could obtain the rents from that property, which otherwise would fall to be part of the recoverable property, by suing the tenant. That would be a civil judgment as a result of which the property had been received by him. The amendment would take that outside the effect of the section.
10.45 p.m.
Lord Goodhart: I take the noble and learned Lord's first example, relating to a spouse, but, with great respect, surely the example of the tenant is wrong. In that case, the defendant is the person who receives the payment, not the person who makes it under the judgment. Nothing in the amendment would prevent the rents becoming recoverable property, whether they were obtained without a judgment or as a result of a judgment.
Lord Goldsmith: I shall reflect on whether the noble Lord is right to criticise that example. If he is, I unreservedly withdraw it. However, it was simply an example. He has accepted that the other example is good and I am confident that there are others that would not meet his objections and in which, without the link provided by subsection (3)(b), one would not achieve the objective of excluding from the process proceedings that are similar in effect and purpose to the civil recovery proceedings, but not in fact the same.

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There are other reasons why recoverable property that has been transferred as a result of civil proceedings may cease to be recoverable. For example, a successful litigant who has no reason to suspect the recoverable nature of the property that he receives will have the benefit of subsection (1), which covers a person who obtains recoverable property in good faith for value and without notice that it was recoverable property.
Without a requirement that tied the particular civil proceedings into the defendant's unlawful conduct, the claimant in civil proceedings would, for no compelling reason that we can see, be in a better position than any other person who had received money or property from the defendant. What matters is the basis for the transfer, not just the fact that there has been a civil process. I invite the noble Lord to withdraw the amendment.
Lord Thomas of Gresford: With the greatest respect to the noble and learned Lord, the clause needs to be looked at again. For example, if an impoverished claimant sues tycoon X for libel and receives damages into his hands, it can hardly be said that tycoon X has disposed of the property; he has had a judgment entered against him and had to hand it over. That is not caught by subsection (1). It appears that if tycoon X is subsequently pursued, the libel damages obtained by the impoverished plaintiff would have to be handed over. Is that right?
Lord Goldsmith: Even at this hour of the evening, I do not immediately see why paying the libel judgment is not a disposal of property by the tycoon. One assumes that otherwise that property in the hands of the tycoon would be recoverable. If the poor person who had been libelled obtained it in good faith for value and without notice that it was recoverable property—the value would seem to be the fact that it was compensation for a wrong that he had suffered—it would not be followed into his hands. I do not immediately see the objection that the noble Lord raises.
Lord Goodhart: I am not satisfied with the noble and learned Lord's response. The provision needs to be looked at again. Subsection (1) is plainly concerned with contracts and with property being disposed of in good faith and for value. It seems wholly inappropriate, for example, to cover the question of damages for personal injury, let alone libel. I accept that there must be some guard against, in particular, a collusive claim, or possibly even a non—collusive claim, to settlement of money as part of a divorce case.
The Government must look at this issue again because it is a potential elephant trap. They need to look at the matter very carefully, consider what it is that they are trying to prevent, consider what this clause may do which could be unfair and a potential cause of real injustice, and come back with amendments to draw the clause much more tightly.
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While obviously I shall ask for leave to withdraw the amendment on this occasion, unless some progress is made on this issue we shall certainly want to come back to it at Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 310 agreed to.
Clauses 311 to 315 agreed to.
Clause 316 [General interpretation]:
[Amendment No. 255 not moved.]
Clause 316 agreed to.
Clauses 317 to 322 agreed to.
Clause 323 [Functions]:
Lord Goldsmithmoved Amendment No. 255A:
Page 188, line 36, at end insert—
"(fa) statutory paternity pay;
(fb) statutory adoption pay;"
The noble and learned Lord said: This group of amendments concerns the taxation provisions in Part 6 of the Bill. They would enable the director to administer statutory paternity pay and statutory adoption pay alongside his other taxation functions. These will become relevant once the Employment Bill, which is currently before the House, becomes law.
The Employment Bill does not extend to Northern Ireland, but the Northern Ireland Assembly will replicate the United Kingdom legislation and regulations once the Employment Bill achieves Royal Assent. The amendments to this Bill take that into account.
Clause 323, to which the amendments relate, clarifies the functions which are included within general revenue functions and the inheritance tax functions which the director is permitted to exercise. It sets out those functions 'which are specifically included and those which are excluded. It is necessary for certain statutory payment scheme functions to be included as it is difficult to separate those from the PAYE process.
The amendments serve only to add the two new statutory payment schemes caused by the introduction of new legislation to those statutory payment schemes already listed—that is, statutory paternity pay and statutory adoption pay. I beg to move.
On Question, amendment agreed to.
Lord Goldsmithmoved Amendments Nos. 255B and 255C:
Page 189, line 16, at end insert—
"(ca) "statutory paternity pay" must be construed in accordance with section 171ZA of that Act;
(cb) "statutory adoption pay" must be construed in accordance with section 171ZL of that Act;"
Page 189, line 26, at end insert
(ca) "statutory paternity pay" must be construed in accordance with any Northern Ireland legislation which corresponds to Part 12ZA of the Social `Security Contributions and Benefits Act 1992;

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(cb) "statutory adoption pay" must be construed in accordance with any Northern Ireland legislation which corresponds to Part 12ZB of that Act;"
On Question, amendments agreed to.
Clause 323, as amended, agreed to.
Clauses 324 and 325 agreed to.
Schedule 5 agreed to.
Clause 326 agreed to.
Lord Davies of Oldham: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at five minutes before eleven o'clock.