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Proceeds of Crime

Volume 546: debated on Tuesday 12 June 2012

I beg to move,

That this House takes note of European Union Document No. 7641/12 and Addenda 1 and 2, a draft Directive of the European Parliament and of the Council on the freezing and confiscation of proceeds of crime in the European Union; and supports the Government’s intention to not opt-in under Protocol (No. 21) to the European Union Treaties at this stage.

I welcome the opportunity to debate this important draft directive in the House this evening, but I should say at the outset that I am sorry that it has had to be scheduled on a day when a number of members of the European Scrutiny Committee cannot be present. It was originally scheduled for 23 May, but it was necessary to move it in order to give more time to consider fully the views of operational partners before deciding whether or not to opt in. Given the weight of parliamentary business and the limited time available before the opt-in deadline, it was not possible to find a time for this debate when members of the European Scrutiny Committee had returned from their pre-presidency visit to Cyprus. That is not as I would have wished, and I have offered to meet the Committee Chairman, my hon. Friend the Member for Stone (Mr Cash), to discuss the directive.

I also recognise that, in order to inform these debates, we must ensure that the House is informed at an earlier stage of the Government’s position on such directives. I have written to the European Scrutiny Committee Chair to underline the high priority that I attach to ensuring that this process and these debates provide more effective scrutiny, and my officials will work with the Clerk of the European Scrutiny Committee and with the European Union Committee in the other place to that end. I am also arranging a discussion with the Minister for Europe to consider how the matter might be addressed effectively.

On the subject of the motion, asset recovery is a hugely important weapon in our efforts to tackle organised crime. The proceeds of crime are not only a central motivation for organised criminals; they fund further criminality. Freezing and confiscating criminal finances hurts organised criminals and protects the public, and I have no doubt that right hon. and hon. Members on both sides of the House will have examples of when the use of asset recovery has been a very effective weapon in providing relief to communities from serious organised criminals. It is an effective means of tackling and putting increased pressure on organised crime groups.

The Minister is absolutely right, but we must do much better, and the better way is to make sure that there is more co-operation between EU countries on ensuring that those who try to find a safe haven for their money in another EU country are caught and their money confiscated as quickly as possible.

The right hon. Gentleman, the Chairman of the Home Affairs Committee, makes an important point about international co-operation—one that we certainly recognised in the organised crime strategy that was published last summer. Criminals may wish to hide or to secrete assets not only in the EU, but throughout the world, so the need to look at the matter in an international context is an important one to which I shall return during my contribution.

In our domestic legislation, we have taken some important steps forward. The Proceeds of Crime Act 2002 is the principal piece of domestic legislation for the restraint and confiscation of the proceeds of crime. It is an advanced and powerful piece of legislation that in most areas goes beyond the minimum standards of the directive that we are debating this evening. It provides a single scheme for the confiscation of the value of the proceeds of crime, following any criminal conviction and regardless of the amount.

If a defendant has been convicted of a listed serious offence or has a number of convictions, the court can assume that all their property is the proceeds of crime and can be factored into the amount of a confiscation order, a power known internationally as “extended confiscation”. It allows for the confiscation of assets that have been transferred to family members or other third parties; it enables the freezing of assets by a court from the beginning of an investigation in order to prevent their dissipation; and it provides civil recovery powers, an intrinsic part of our approach to this area of law, whereby the focus is on the property, not on the person who holds it, and no conviction is required. That is a particularly useful tool for tackling high-level organised criminals for whom it is hard to obtain a conviction.

In 2010-11 UK law enforcement agencies froze or recovered more than £1 billion of criminal assets. The amount of assets recovered has increased year on year since the 2002 Act, and one of this Government’s first steps on entering office was to do away with some of the arbitrary targets that the previous Government imposed on law enforcement professionals. This has galvanised their professionalism and their approach to ensuring that more assets are recovered or frozen. Certainly, the UK is recognised as a leader in this field. However, the Government want to do more, particularly on international asset recovery, as we made clear in our organised crime strategy of July 2011.

In 2008, it was estimated that some £560 million-worth of UK criminal assets were held abroad. That underlines the level of sophistication that a number of organised crime groups are seeking to deploy in order to hide or to shield assets. Improved international co-operation is therefore a necessary step towards recovering that money. That is why we welcome the aims of the directive, if not some of its provisions. It is right that we seek to drive up standards throughout the EU and find better ways of working together with our EU partners. To that end, the directive covers confiscation following a criminal conviction, extended confiscation, third-party confiscation, non-conviction-based confiscation, and powers to freeze assets. The UK already has all those powers under the Proceeds of Crime Act, and so, in almost all areas, we exceed the minimum standards established by the directive.

The purpose of the directive is to require member states to be able to freeze and confiscate the proceeds of cross-border serious and organised crime. The Commission argues that the confiscation of the proceeds of crime in the EU is under-utilised despite the existing EU legal framework. It says that there are three problems with the current EU legal framework: its incomplete or late transition into domestic law, diverging national provisions that make mutual recognition more difficult, and the low utilisation of confiscation in practice. The directive therefore creates minimum standards for the freezing, management and confiscation of the proceeds of crime. The Commission intends that minimum standards will lead to greater co-operation, but a mutual recognition instrument has not yet been published.

It is vital that we get the detail right, and we must pay great attention to the effect of the directive on our existing domestic regime and its likely operational impact. In that regard, the Government have identified a serious problem with the directive. As drafted, it poses a very real threat to our domestic non-conviction-based confiscation regime. Operational partners have expressed concern that opting in at this stage poses a risk to the powers used by our law enforcement agencies to target and disrupt the most serious organised criminals. Our non-conviction-based confiscation powers are civil law measures that allow prosecution agencies to take action against property that they think has been acquired through unlawful activity. The action is not taken against an individual, and no criminal conviction is necessary. As I said, it is a particularly useful tool for tackling the high-level organised criminals against whom it is very difficult to achieve a criminal conviction.

In 2011-12, approximately £20 million-worth of criminal assets were recovered using non-conviction-based confiscation powers. It is important to note that the Proceeds of Crime Act, and the use of the civil standard of proof as structured within the Act, has been upheld by the Supreme Court, and therefore its operation has been subject to judicial scrutiny at the highest level. Because of its criminal law legal base, the directive risks placing non-conviction-based confiscation measures in the UK on to a criminal law footing, opening new avenues of legal challenge to our powers and, in many ways, undermining the court judgments that have been secured in relation to the operation of the Proceeds of Crime Act. If criminal law procedural protections and a criminal law standard of proof were introduced, our domestic regime would be severely weakened and our law enforcement agencies would find it harder to disrupt the workings of some of the most dangerous organised criminals.

This is a technical argument, but it is of great importance to the law enforcement agencies that protect our country from organised crime. Under qualified majority voting, there is no guarantee that we can secure the necessary changes to the text. This Government will not risk hindering the work of law enforcement agencies in tackling high-level criminality. The risk is simply too great.

Is it not the case that non-conviction-based confiscation powers exist in many other EU countries and that the directive is therefore likely to be changed to increase flexibility and incorporate those powers, rather than to reduce it?

There is likely to be negotiation and discussion on the directive, as the right hon. Gentleman will know, given the manner in which such instruments are taken forward. However, given the significance of the existing powers and the way in which the regime has been tested before the courts, the key point is that because of the use of qualified majority voting, which I have mentioned, there is no guarantee that there will be the outcome that he suggests. The Government have taken the judgment that that risk is too high. On balance, we believe that not opting in at this stage is the better option. The risk to our civil recovery regime is simply too great, and I am not willing to take it, especially when operational partners have expressed such concern to us.

None the less, it is our intention to play an active part in the negotiation on the directive. Our experience on the recent human trafficking directive shows that the UK can have an influential voice, even when it does not opt in at the outset. In that case, we opted in to the directive at the post-adoption stage. The UK’s recognised experience and expertise in asset recovery will certainly help with the negotiations.

Our wider aim is to establish effective mutual recognition arrangements for both conviction-based and non-conviction-based confiscation orders. Although the draft directive adds nothing to our domestic asset recovery regime, mutual recognition arrangements could greatly improve our ability to recover the proceeds of crime held in other member states. The draft contains no proposal to establish an effective system for the mutual recognition of confiscation orders. Law enforcement partners say that they would welcome such proposals. The Government will consider how best to use our influence on that matter.

It is important to underline the comments of the Chair of the Home Affairs Committee on how mutual recognition can be a powerful tool. It is important to focus on that point. Indeed, the EU Select Committee in the other place has highlighted it as an issue with the directive and it needs careful attention.

Is it not the case that there is bilateral mutual recognition in almost every case and that we do not necessarily need mutual recognition under the aegis of the European federal government in Brussels?

It is certainly true that bilateral arrangements can be structured. All that I am seeking to say is that negotiations on the directive provide the UK with an opportunity to have an influence. They do not affect our decision, reflected in the motion, not to opt in at this stage because of the serious risks and operational requirements that I have identified.

I urge the Minister to be very cautious about mutual recognition, because it means that countries that do not have a legal system that is as robust as ours can have their orders enforced in this country. It therefore threatens the rights of British subjects.

I certainly hear my hon. Friend’s point, and we will monitor that carefully in relation to the directive. As I have indicated to the House, there is currently no proposal in the directive dealing with mutual recognition.

I hear what the Minister says, but I wish to clarify it. In another place’s proceedings on the matter only recently, on 22 May, Lord Henley, the Minister, said:

“The directive offers us a valuable opportunity to raise the standard of asset recovery legislation in the EU, enhance our co-operation with member states, and increase our powers to recover criminal assets held overseas.”—[Official Report, House of Lords, 22 May 2012; Vol. 737, c. 778.]

Why did the Minister in the Lords say that only two weeks ago, whereas the Under-Secretary is saying today that we are not going to opt in?

If the right hon. Gentleman reads the report, he will see that my noble Friend underlined clearly that the Government had not concluded their consideration of the directive at that point and had not formulated their decision on whether to opt in. We have listened carefully to the concerns expressed by law enforcement partners about civil recovery powers, and we have determined that the best course of action to protect our laws and our current civil recovery operation is not to opt in. I am surprised that the right hon. Gentleman seems to challenge that view. He seems to have determined that it would be appropriate to opt in.

I was simply looking at what was said only three weeks ago in another place and what the Minister is saying now. Given what he has said today, is he willing to publish in the Library at least some sort of précis of the responses that he has had from the agencies concerned, so that we can examine them in the light of the directive?

I am certainly happy to consider that, but the right hon. Gentleman will recognise that there are sometimes operational sensitivities attached to doing so. We have heard clear representations from operational law enforcement partners, which have been an important factor for the reasons that I have outlined. We none the less recognise that the UK would benefit from the directive raising standards across the EU regardless of whether we opted in, because of the developed legislation that we have in place in this country.

Not opting in at this stage is not a sign that we do not care about asset recovery. It is a sign that the UK takes it very seriously and is committed to getting legislation right for the UK and all member states. Our ultimate aim is to achieve better mutual recognition of both criminal and civil confiscation. The directive will not achieve that, and we will press for a further instrument or instruments in due course that would have that effect. We will analyse the directive carefully, but in the context of the current version, and for the reasons that I have explained, our clear judgment is that the UK should not opt in at this point.

The nature of the debate has changed slightly since the initial discussions in another place some weeks ago. I welcome the opportunity to discuss the draft directive on the freezing and confiscation of the proceeds of crime in the European Union, and I am grateful to the Minister for his explanation of his view. He mentioned that the debate should have taken place before the recent recess and was pulled at the last minute. That might be for the reasons of operational advice that he gave, but I smell a bit of anti-Europeanism on the Conservative Back Benches—there is a slight whiff of concern about the EU encroaching on the House’s legislation. Perhaps that is one reason why the Minister has looked at the matter in more detail, but I accept at face value his indication that he has taken advice.

The directive seeks to harmonise national responses by laying down minimum rules for member states with respect to the freezing and confiscation of criminal assets. As the Minister knows, dissipating and converting the proceeds of crime into a variety of assets is one way in which criminal gangs and terrorist organisations operate. The process of uncovering such assets can be complex and difficult, and international co-operation is an indispensable tool in the recovery process.

Like the Minister, I welcome the promotion of cross-border responses. In order to be effective in tackling organised and other crime, we need to co-operate and strengthen our existing relationships with other states within the EU. The Commission believes that EU and international law remain underdeveloped and underutilised. Crime does not respect borders, and we must have a proactive cross-border approach.

I found myself agreeing with Lord Henley, the Minister in another place, who said on 22 May that the directive offers a valuable opportunity to raise the standard of asset recovery in the EU. The Minister has tonight indicated that we already have a strong UK provision on such matters. In fact, for the most part, the UK exceeds the requirements of the draft provisions, owing in no small part to the measures he mentioned, such as the Proceeds of Crime Act 2002, which was passed by the previous Government, and the Terrorist Asset-Freezing etc. Act 2010, which I supported as a Minister and saw through the House as a shadow Minister only a couple of years ago.

The Minister has noted that there are a range of figures, but around £560 million-worth of UK criminal assets are overseas. We need to look at how we recover those, because sums of that magnitude indicate that the Government can do more. Effective international co-operation is key.

I believe the directive will be an important tool in tackling serious organised crime, but I am willing to take at face value what the Minister has said. I would like further information on any concerns that have been expressed to him. He can share those either with the House or with me on—dare I say—a Privy Council basis, because I would like a flavour of them. Ultimately, I want an improvement in the asset recovery regime across Europe and international co-operation with our European partners to deal with this problem.

As the motion asks the House to take note of the document, it is important that we examine it. The European Scrutiny Committee highlighted a number of issues, including a range of matters on which there needed to be further work—I accept that these are for discussion—including the extent of criminal offences and the implications of article 8 on safeguards for the legal aid budget. There is a concern whether article 9 includes value-based confiscation, and a concern about articles 3 and 4 on the confiscation of the proceeds of crime, and on extending confiscation when the court

“‘finds it substantially more probable’ than not that these assets are derived from other similar crimes.”

There is concern about article 7.2, under which, in urgent cases, assets may be frozen prior to obtaining a court order, which is at odds with UK legislation. Article 7 requires member states to be able to freeze property that is in danger of being dissipated, hidden or transferred, as ordered by a court.

A range of issues were raised, including on article 11 and others, by members of the European Scrutiny Committee.

I am listening with care to the argument the right right hon. Gentleman puts to the House, but I am unclear on one thing: does he think we should opt in to the directive, yes or no?

I have said to the Minister that we believe that the directive is a positive development, as the Minister in the other place also said, only two weeks ago, and we should look at it in a positive way. I will take at face value the concerns that the Minister has raised this evening about operability and the advice that he has received from the agencies, but if the hon. Gentleman thinks that we should not opt in because of a wave of anti-European sentiment, that is a very different matter indeed. I will certainly be a positive European. We should have co-operation. I want to see co-operation between states. I also want the European Union to take powers to take the assets of criminals abroad who are operating and making profits in this country. That would not be a bad thing. I would very much welcome further discussions with the Minister about the points that he has raised, but in principle I have no objection to a Europe-wide document helping to support this approach and enshrine improvements on what we currently have in British law.

For the anti-Europeans on the Government Benches, let me say that it is certainly a yes. I certainly wish to see co-operation on a Europe-wide basis to freeze terrorist and criminal assets and to repatriate them to this country. The hon. Gentleman can certainly take it as a yes. This evening I have listened to what the Minister has said, which indicates that he has had advice—which I have not seen—that says that there are difficulties with this measure. What I am saying to the Minister—and to his right hon. Friend the Home Secretary, who is in her place—is that my right hon. Friend the shadow Home Secretary and I would wish to have sight of that advice and to have further briefing on it, so that we can scrutinise the operation of the process by the Minister and how he intends to take forward discussions on the document as a whole. However, I sense that Government Members have objections to the very principle of such co-operation, rather than to the practice that the Minister has set out.

I would like to have some idea from the Minister—either now or after contributions from right hon. and hon. Members—of how he will take this matter forward. He has indicated that he has concerns about certain issues, but he has not yet shared with the House the details of what they are. What is his timetable for discussion with his European Union colleagues on these matters? Does he have a timetable to try to resolve the issues? Does he intend to return to the House at some point to sign up to the document, or has it been kicked into the long grass because he knows that, ultimately, Members such as, I suspect—with due respect—the hon. Member for Rochester and Strood (Mark Reckless) and others would vote against the measure, no matter what was brought forward, as a matter of principle? If that is the case, the Minister should be honest with the House, because we will certainly return to this matter in due course, when we have seen the advice that he has received, as far as he can share it with us. I sense that this is not just about the operation and practice of the measure; rather, I sense that there are certain elements on the Government Back Benches with a fundamental objection to the principle of such co-operation.

Many Members on the Government Benches agree that we should co-operate. However, does the right hon. Gentleman not understand that we can co-operate without giving up control in some of these policy areas and without subjecting ourselves to the authority of the European Court of Justice, which is what this directive is about?

Case proved, m’lud: the hon. Gentleman, along with the hon. Member for Rochester and Strood and others, does have concerns about this issue in principle. What I take from the Minister this evening is that the advice that he has received from operational organisations points to concerns about the ability of the measure to deliver what it should deliver, which is an increase in the assets taken from criminals and terrorists, and their repatriation to the United Kingdom. If that is the reason he is lukewarm this evening about progressing the measure, I will look at that in detail. If the reason is the pain and suffering that hon. Gentlemen such as the hon. Member for Rochester and Strood and others may bring upon him—because of their fundamental objections to further European co-operation on such matters—that is something that we will also revisit in due course. If the Minister can provide us with a timetable for further discussion and examination of the issues, and if he is saying that he will rule out for ever signing up to this—[Interruption.] If he would like to say that on the record, that would be helpful.

I say to the right hon. Gentleman that we do not rule anything in, and we do not rule anything out. It will depend on how the negotiations proceed. The EU itself will be leading the timetable, and the presidency will take that forward. I understand his desire for a timetable, but that is not within my gift.

We have heard an interesting development in the consideration of the order this evening. There has been a clear position change from that expressed by the noble Lord, Lord Henley, only two weeks ago.

I am afraid there has. The Minister has explained this evening the basis on which he has made his comments on the order. I will seek to obtain further information on that, as that would represent valuable progress. I suspect, however, that underneath all this there is a slight concern about the reaction of some Conservative Members, who will undoubtedly raise the concerns that I have mentioned, during the rest of the debate.

I am grateful to have been called so early in the debate to represent the European Scrutiny Committee, replacing my hon. Friend the Member for Stone (Mr Cash), who is away. I apologise if, in comparison to him, I am more loquacious.

I want to start by raising a few points relating to scrutiny. The Minister was gracious in accepting that there had been problems with it. The document was first made available for an opt-in decision in the middle of March, with a three-month time scale for making a decision which ends on 15 June. It is a pity that Her Majesty’s Government could not have made up their mind on this matter slightly earlier in the process.

I also want to raise a point about the other place. The debate in this House was cancelled on the ground that we were unable to debate the matter until the Government had made up their mind, but in the same circumstances the other place was able to debate it. I am not entirely sure whether that is a discourtesy to the other place or to us, but it seems odd that such a rule should apply in one place and not the other.

Perhaps I can help my hon. Friend. There was a distinction, in that the debate in the other place was on an Opposition motion, rather than a Government motion.

I am grateful for that clarification. I should also like to say, for future reference, that I have been given hope that the Government might occasionally listen to what the House says, and that having debates before a decision is finally made would not necessarily be a bad thing. It might be a pious hope that speeches made from these Benches might influence the wise thoughts of Her Majesty’s Government, but it is one that I hold to. I am grateful to the Minister for his explanation, but I hope that we can have better scheduled debates in future. From a personal point of view, I believe that the slot at the end of business on Wednesdays is extremely convenient for most people.

It is also a shame to be having this debate now, when half the members of the European Scrutiny Committee are away in, of all places, Europe. They are visiting Cyprus, in preparation for Cyprus taking over the European Union presidency. I was glad to have the opportunity of staying in the House. Like you, Mr Speaker, I prefer not to leave. I believe that you require specific permission to leave the country, and I would not mind being under the same constraint myself.

I shall move on to the substance of the opt-in decision, and to the Minister’s comments. It is tremendously important that, under our current law, any freezing order requires the order of a court, but that would not be the case under the proposed document from the European Union. It is unsatisfactory to allow the administrative freezing of assets without a court interfering. That is an important principle of justice, and on that basis alone it would be wise of the Government not to opt in to the directive.

As the Minister said, the directive would offer no direct benefit to our domestic asset recovery regime. That being the case, the only argument for opting in would be to have more Europe, and that is not the policy of Her Majesty’s Government, who are committed to keeping Europe closely under watch and limiting any extension of its powers. It is therefore difficult to see what changes to the draft directive the Government would find acceptable in order to make it better, or whether there is any prospect of their insisting that anything that happened under it should require a court order before being implemented. It would be interesting to know from the Minister what would be the consequences of our not opting in—by what would we be bound in our existing agreements and how would they develop, and what would be our ability to maintain bilateral arrangements with other member states in future? Might that not be a more suitable way of approaching the matter?

There are concerns about the standing of the directive under European constitutional law. As the Minister and other Members know, we have the ability to opt out of a great number of the crime and justice directives in 2014, but—and there is a but—if we signed this proposed directive, it would not be part of that block opt-out and it would remove our ability to opt out of three other directives that we have so far opted into. The block opt-out does not apply to EU policing and criminal justice legislation adopted following the Lisbon treaty’s entry and coming into force where the UK decides to become bound by it, and neither does it apply to pre-Lisbon treaty legislation that was amended once the Lisbon treaty came into effect. The three pieces of pre-Lisbon EU treaty legislation that we would lose are on money laundering, the identification, tracing, freezing, seizing and confiscation of instrumentalities and the proceeds of crime under the framework decision 2001/500/JHA on the same subject, and another framework decision on the confiscation of crime-related proceeds. We would thus be tightly binding ourselves into all our future confiscation and money laundering policies being determined at the European level.

My hon. Friend makes an important point, which is that the longer we delay our decision about whether to exercise our block opt-out under the Lisbon protocol, the more it can be undermined by subsequent directives such as this one coming along. Does he agree that we should make a decision sooner rather than later about whether or not to exercise that block opt-out?

I am in complete agreement, and the right hon. Member for Delyn (Mr Hanson) might not be surprised to know that I would opt out of everything at every possible opportunity—and I am more than happy to admit that and to have it held against me in evidence by suitable authorities in future. It is important not to get sucked into more changes through the development of existing pre-Lisbon directives that then become binding and are not subject to the opt-out.

The other important aspect is that this directive does not apply exclusively to cross-border activities, as it applies in the UK alone where we are enforcing standards that apply to crimes committed purely in the UK, so we need to raise the question of what the European dimension is in all cases. If any directive is suitable, is it this directive, or should a completely different one be reframed relating to cross-border activities? That poses all the questions about recognition of foreign countries’ laws and enforcements that we raised with the Minister.

We have those problems to face in a once-and-for-all decision, but I also want to look at what the European Union document states on this issue and the basis on which it has been produced. The two legal bases are article 83(1) and article 82(2) of the treaty on the functioning of the European Union. Article 83(1) includes provisions on organised crime, which the European Commission has decided includes almost any serious crime that could be mentioned, so we can see immediately in that justification part of the general European creep in using the treaties to extend the Commission’s remit—indeed, the EU’s own documentation admits that.

The other legal basis, article 82(2), is all about the facilitation of mutual recognition, so although the current document is not about mutual recognition specifically, this is part of the basis of the directive coming into force. There is some broad contradiction between how the directive will be applied and the legal base used for it. I think we should be suspicious of the EU extending its powers on a basis that it then does not wish to use. Why is it doing it that way?

I know that many other Members wish to speak, but I want to say a little about the way in which the European Union reached its decision. As can be seen in the document provided for the debate, it considered five policy options. The first was the status quo, which it immediately rejected as being completely unsatisfactory. Each of the subsequent options had a slightly more European context than the one preceding it. The second option was non-legislative:

“promoting implementation of existing confiscation obligations… and promoting… existing mutual recognition obligations”.

The European Union did not like that one.

The third option was the “Minimal legislative option”, involving

“transposition and utilisation workshops plus additional policy actions addressing identified deficiencies in the existing”

legislation. Lo and behold, the European Union did not like that one either.

The fourth option was the

“Maximal legislative option without mutual recognition”.

I do not think that “maximal” is a word, Mr Speaker, but your vocabulary is better than mine. Perhaps I should ask you to rule on it later in the day. That option, it was said, would provide many benefits, and

“would consist of all policy actions which do not involve legislative action in relation to mutual recognition.”

Finally, there was policy option 4.2:

“Maximal legislative option including mutual recognition”.

We can see exactly how the process operates. The European Union issues a discussion document and considers all the options. “What should we do? Should we just leave it to the nation states? No, that will not do: we cannot trust them. Should we just do a little bit that will ease the process and make it a bit better? Should we round some of the corners to make them smoother? No, we had best not do that; the European Parliament would not like it.” That is one of the arguments that it uses. “We must go for the maximum option. We must go for the most federalist option. We must go for the option that brings in the European Court of Justice to rule over laws that apply purely in the United Kingdom and purely in the criminal justice area.” That is how the European Union operates.

Her Majesty’s Government were absolutely right to decide not to opt in at this stage, and they should remain right by robustly refusing an extension of EU powers which is, as always, being introduced in the area where it is hardest to oppose. The suggestion is that there are all those nasty people out there, and that if we all club together we will be able to deal with them. However, a Bulgarian enforcement order on some Englishman who has mislaid a parking ticket is not a way of reducing crime. What we need is a robust British system—which I think we already have—that is subject to fair controls and court orders. We do not need a further power grab by the European Union.

It is always a pleasure to follow the hon. Member for North East Somerset (Jacob Rees-Mogg). I do not know whether he was implying that the Government were holding the debate this evening because the European Scrutiny Committee had gone to Cyprus, but I am glad that he was left behind—or remained behind—to participate in it.

I should have thanked the Government rather than criticising them, because they gave me a chance to speak for a little longer than normal.

I am sure that the Government are most grateful for the hon. Gentleman’s thanks.

Last night I was present at the launch of a document produced by the hon. Member for Bournemouth West (Conor Burns) about the operation of the European arrest warrant and what it has delivered over the last few years. I know that the hon. Member for Esher and Walton (Mr Raab) is a frequent commentator on its justice and home affairs implications for our country.

I think that we should be cautious in dealing with these matters. The EU document needs to be considered with great care. I am not one of those who believe that we need a directive in order to secure co-operation between EU partners, but I think that my right hon. Friend the Member for Delyn (Mr Hanson) deserves the explanation that he seeks. I think that he deserves to be told why the Minister in the other place was so enthusiastic about the directive, and why the Government have apparently changed their mind. Of course, if there is a valid explanation, and if the various agencies—the Serious Organised Crime Agency being one of them—make representations to the Government pointing out that this is going to create problems for our legislation, it is important that that advice is shared not only with the Minister, but with the House.

The hon. Member for South Ribble (Lorraine Fullbrook) and I recently returned from an official visit to Colombia as part of a Home Affairs Committee delegation, where we were looking at the drugs trade. We noted a very important fact: only 2.6% of the profits from the trade in cocaine remain in Colombia. Some 97% of cocaine profits are administered and laundered within the European Union—in our country and other countries of the EU. That means that our existing structures are not used appropriately enough to catch the people who are responsible for drugs having become the biggest illicit activity in the world.

Even though a directive would help, it will not provide the answer. The Government are right not to opt in unless and until there are further negotiations, therefore. We need to make sure that the structures that are in place in the various countries of the EU can work together to catch those responsible for laundering the profits from drugs. I hope that the Government will use the time that will be available to them as a result of their decision not to opt in constructively and productively, and that they look at the institutions and organisations and make sure that that co-operation is improved. There are, of course, organisations—such as Europol and Interpol—which can be used effectively. I do not think Europol is used enough. We have a very good British director of Europol, Rob Wainwright, who was trained at SOCA. We must co-operate much more closely, without legislation from Brussels being needed.

Drugs is one example. The other is human trafficking, which is the third biggest illicit activity in the world, with profits of £32 billion a year. Through our co-operation with the Romanian authorities in Operation Golf, we showed that it is possible to have mutual co-operation with other EU countries without having a further directive, if there is willingness on the part of our European partners to work with us to deal with illegal activity.

The right hon. Gentleman mentions Europol and the issue of trafficking. Does he recall that when the Home Affairs Committee visited the Greek-Turkish border, one of the issues we found was that the structures of Europol were not well designed to secure co-operation with Turkey? Very often, the European basis of Europol and the insistence on doing everything through that framework was getting in the way of practical co-operation.

I am happy to agree with the hon. Gentleman, who is also a fellow member of the Home Affairs Committee; he is absolutely right. The EU looks at these issues only within the confines of the EU. Because Turkey is not a member, it is not included in any aspects of co-operation. An example of that is the way the RABITs were deployed in Greece to deal with illegal immigration. Because the UK was not part of Schengen, we were not allowed to be a formal part of the activity of the RABITs. As a result, we were left marginalised.

Mr Speaker, I can see that you are about to tell me that I am out of order. [Interruption.] Oh, you are not. You were frowning, Mr Speaker, and I have known you long enough to know that a frown may have indicated that you were about to stop my flow. Let me go back to the original reason behind this debate. I was tempted along the other path by the hon. Member for Rochester and Strood (Mark Reckless).

Order. I am sorry if the right hon. Gentleman was concerned that I was frowning. Perhaps I can satisfy simultaneously his curiosity and that of the hon. Member for North East Somerset (Jacob Rees-Mogg). I have made inquiries, as the hon. Member for North East Somerset would expect, and I am now in a position to tell him and the House that the word in question, maximal, is the penultimate word in the second column of page 1,720 of the new “Shorter Oxford English Dictionary”. I know that the hon. Gentleman already knew that, but I am just reminding him.

I am enormously grateful that my speech will go down in history as the one in which you made such an important ruling, Mr Speaker, and thank you very much for choosing my speech in which to do it.

Let me conclude by saying that I hope the Minister will use the time available to the Government to make sure that the structures I have described are used to their maximum to ensure that we get the greatest amount of co-operation.

Of course. A RABIT—rapid border intervention team—is a rapid deployment force used by the EU to go to countries that face influxes of migrants who are illegally trying to enter the European Union. It is not the furry thing that runs around the hon. Gentleman’s constituency.

When the Minister winds up—I will read his reply in Hansard, and I apologise, Mr Speaker, for not being here for the wind-ups—I hope that he will look at the issue of the new National Crime Agency to see whether any of this affects the way in which the NCA is going to deal with the mutual co-operation that exists between our agencies and other EU countries. I have mentioned the visit that the hon. Member for South Ribble and I made to Colombia. The one agency that was praised, from a front-line commander in the middle of the jungle that we visited to the President of Colombia, President Santos, was the Serious Organised Crime Agency. It was praised particularly for the way in which it has worked with the Colombians and with other Governments throughout the world to combat illegal drug activity.

As the right hon. Gentleman will not be here for the wind-ups let me say now that I will reflect on his comments. I am certainly very appreciative of and recognise the work that SOCA undertakes around the globe in a number of different regions. The development of the NCA, and certainly the utilisation of legislation on the proceeds of crime, will be part of our approach to strengthening and developing our response to organised crime. The NCA is one part of that.

I thank the Minister for that answer.

Finally, when we spend money on organisations such as SOCA, on which we spend £0.5 billion pounds a year, we expect value for money. We expect it to be able to go out there and seize assets. At the end of the day, that is how the public will judge the effectiveness of these organisations. Working with our European partners can only help us to achieve that. We do not need more legislation or, necessarily, more directives, but we do need the co-operation of our partners to succeed.

It is a pleasure to follow the Chairman of the Select Committee on Home Affairs, who has been able to put Members’ minds at rest on the subject of RABITs this evening. It is also a pleasure to follow my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), who was loquacious, in the earlier Defamation Bill debate, on the joys of coalition. I wanted to point out to him that I feel a particularly heightened sense of joy on coalition partnership working during these European Union debates.

There are a couple of points that I should like to make on this subject. I am sure that all fair-minded Members will acknowledge the value of a robust EU-wide regime for freezing and confiscating criminal proceeds, because cross-border crime is a serious and growing threat to the UK. Inevitably, one of the consequences of the four freedoms of the single market—the free movement of goods, services, people and capital—is the growth in cross-border organised crime and proceeds of crime. I am sure that Members will also agree that it is important that the UK maintains its European and international lead on these issues. That has been the UK’s position since 1998. Indeed, the EU’s 1998 joint action, which the directive would replace, was a UK proposal. Currently, in almost every respect, UK domestic arrangements match or exceed the minimum rules in the directive, so opting out permanently would threaten the UK’s leading role.

I agree that the text of the directive is not perfect and that the UK must use its active observer status to improve it and opt back in. As the Minister indicated, there are legitimate concerns about how the draft directive would interrelate particularly with our non-conviction-based confiscation powers. In response to my intervention on that point, he said that there would be no guarantee that the directive could be changed to accommodate our non-conviction-based confiscation regime. I wonder, however, whether he has any intelligence about whether that would be likely, given the extent to which these non-conviction-based confiscation schemes operate in other EU countries. I hope that he can reassure me that the UK will use its status to seek to galvanise support for ensuring that our non-conviction-based confiscation regime can sit within the scope of the directive and secure other changes deemed preferable so that we can opt back into the directive post-adoption.

As a member of the European Scrutiny Committee, I want to place on the record my extreme disappointment at the timing and last-minute nature of this debate. We have had the documentation since March, but things have been left till the last minute. One debate was cancelled and now this debate is being held when the majority of Committee members are on an important pre-presidential visit to Cyprus. Those of us who are here are here because other commitments prevented us from going.

The timing of this debate is therefore unfortunate and does not bear out the spirit that the Minister for Europe promised when he said he would continue to honour the enhanced parliamentary scrutiny of justice and home affairs opt-ins. In a written ministerial statement in January, he said that such debates would form part of a package of measures intended significantly to strengthen Parliament’s oversight of EU justice and home affairs matters and make the Government more accountable for their decisions in the EU. It is unfortunate, therefore, that this debate has been called at the last minute and at such short notice, as it has not given hon. Members a chance to prepare.

The Minister talked about having influence without intending to opt in. Will he clarify how he sees the UK continuing to influence the process if we are not opting in at this stage? Will he expand on his explanation of the types of changes in the draft directive that would be needed for the Government to opt in to the directive, even after it has been adopted? I thank him, by the way, for the detailed letter sent to the Chairman of the European Scrutiny Committee, the hon. Member for Stone (Mr Cash), and the negotiating objectives, which are particularly helpful. If the Government do not secure the necessary changes, would there be any other ways in which some sort of mutual recognition could be established? Does the Minister see any particular ways forward on that? Lastly, what would be his assessment of the implications for broader international co-operation on the freezing, confiscation and recovery of proceeds of crime, not only with EU partners but even further afield, if the UK does not participate in this directive? It is important that we know both sides of the question. With those few remarks, I conclude.

I support the motion, and I commend the Minister and the Home Secretary for taking a wise decision. I wish to speak briefly because after years of our sleepwalking into many mindless EU regulations, we are at last getting some substantive scrutiny of and rigour in how we take these decisions under this Government and in this Parliament. I also wish to commend the European Scrutiny Committee and, in particular, my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). That Committee has become the nightwatchman for Parliament on these matters, and on this directive in particular.

This draft EU directive is flawed. The Minister has explained one of the specific law enforcement problems with it, but beyond that there are six reasons why Britain should not opt in. The first of those is the basic issue of principle: the directive empowers the state to freeze assets without a court order being obtained first, and that extraordinary proposal is contrary to the fundamental tenets of justice in this country. Given the exponential increase in security legislation in this country since 9/11 and the many examples of broad powers being expansively interpreted by law enforcement agencies, whether inadvertently or otherwise, under the Regulation of Investigatory Powers Act 2000 and elsewhere, the retention of judicial oversight before making such an order is vital.

Those who want to make a practical rather than ideological argument in favour of opting in should note that in the UK a court can be asked to issue a property freezing order at any time and, if necessary, without notice to the affected party. The risk that assets might be moved if a court order was first sought are not a good reason for us to legislate along these lines. The decision to deprive an individual of their property should always require a judge’s consent.

Although the Labour Chair of the Home Affairs Committee took a different view, how does my hon. Friend react to Her Majesty’s Opposition apparently, in principle, supporting opting into this directive, despite the issue of principle, to which he refers, of the state taking away a private citizen’s assets—freezing them—without any reference to a court?

I thank my hon. Friend for that. I think we saw a classic piece of fence-sitting. There is a clear contradiction in the position set out by the shadow Minister, which I shall refer to briefly in due course.

The second argument against opting in is, as the explanatory memorandum explains, that there has been no formal domestic consultation yet, so the House does not have the official and formal views, based on operational law enforcement experience, of the police, SOCA, the intelligence agencies and other departments, let alone external experts and groups, on the need for and the practicability of what is being proposed. The Government are therefore right to be cautious and not to be bounced into signing up to a broad new law with far-reaching implications that have not been properly thought through. I noted that the shadow Minister has explicitly requested some gist, explanation or consultation in respect of the nature, character and substance of those submissions, yet without having seen them, he would be happy to opt in anyway. I respectfully suggest to him that the ideological view in this debate and in this House is his, in favour of more JHA integration, irrespective of the scrutiny of the merits and the substance.

The third argument against opting in relates to the costs associated with this directive. Those remain unquantified, but they could well be substantial. The directive will require changes to UK primary legislation. It would introduce new data collection requirements, specifically for evaluation purposes at the EU level. Those would create a pointless administrative burden for UK authorities and lead to an additional bureaucratic tier of EU monitoring of our practices. In addition, as has been said and as the explanatory memorandum explains, the directive’s insistence on effective remedies could add to the legal aid bill, just as we are taking difficult decisions to reduce it which require uncomfortable sacrifices at home.

The fourth objection is that the UK already has ample powers in the area of asset confiscation and freezing. The Government’s explanatory memorandum states:

“We believe that the UK exceeds many of the minimum requirements and so we do not foresee that it would have an impact on the number of cases.”

If anything, those powers have become too broad in the post-9/11 era. The amount of money confiscated by the UK authorities rose by more than 500% between 2003 and 2009, which is scarcely the symptom of a weak regime. The reality is that the directive is neither necessary nor desirable.

Under the Proceeds of Crime Act 2002, the UK framework for dealing with the confiscation and freezing of assets is perfectly robust. Let us be honest about this—I think that the shadow Minister should be honest about it: by legislating on this matter in Brussels, we would be legislating for the failings of other EU member states whose regimes are criticised by the Commission as “underdeveloped and underutilised”. In other words, we are expected to sign up to this blunt EU directive to try to encourage other EU states to pull their socks up. That is not a satisfactory basis for legislation in this country. For one thing, most of the failings in other member states arise less from legislative defects and more from deficiencies in operational law enforcement capabilities. The statement from the Commission suggests that the problem is less one of legislation and more one of law enforcement.

The Home Office recognised that point in its explanatory memorandum, which states:

“The UK does not consider that non-legislative options have been fully considered”.

That is the fifth objection to opting in. If there are alternatives to legislation, why have they not been thoroughly and properly examined by the Commission before it rushed to churn out yet another intrusive and in certain respects draconian directive?

The final objection is the impact on the UK’s 2014 opt-out decision on crime and policing, which has already been mentioned. Every time the UK opts in to one of the 130 or so measures that are subject to our block opt-out, that measure is removed from the list of laws that the UK will have the chance to repatriate by 2014. In other words, if we opt in we will automatically become subject to the jurisdiction and interpretation of the Commission and European Court of Justice. Given that Brussels will be assuming competence over broad and, for the UK, unprecedented security powers, that is not an ideological issue but a major constitutional one.

The directive is in part draconian, but it is in whole costly and unnecessary. It conflicts with basic principles of British justice and would undermine Britain’s opportunity to wrest back democratic control of justice and home affairs legislation. There is no good reason why Britain should opt in—the Opposition have not advanced one—and for principled and practical reasons, we should remain out. I commend the Home Secretary and the Minister for their rigour in reaching this decision based on the substance and merits of the matter.

Thank you, Mr Speaker, and I will be brief given the late hour. I thank right hon. and hon. Members for their contributions tonight and I think that the debate shows the importance not just of the subject matter but of debating such decisions in the House to allow a full exploration of all the issues before a final decision is made.

In response to my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) and the hon. Member for Llanelli (Nia Griffith), who are members of the European Scrutiny Committee, let me underline the comments I made at the outset. The Minister for Europe is alongside me on the Treasury Bench tonight and we will work with the Committee and consider ways in which we can seek to ensure that Government decisions are communicated to the Committee and the House in advance of such debates so that we can facilitate further scrutiny and examination of the matters before us. I give the House a commitment that we will take that forward after this evening’s debate.

On the issue of mutual recognition, it may be of assistance if I say that the UK already succeeds in recovering assets from member states and other countries outside the EU in the absence of a directive. Some of that co-operation is a result of working through an existing mutual legal assistance framework on criminal matters that exists independently of and will not be affected by the directive. As I have said, the directive does not and is not intended to contain any further mutual legal assistance measures. However, as I said, we will explore the options for new mutual recognition for both conviction and non-conviction-based confiscation as these measures have the potential greatly to improve our ability to recover the proceeds of crime held in other member states.

I certainly recognise the emphasis on practical co-operation—a point that was made by my hon. Friend the Member for Esher and Walton (Mr Raab) and by the Chair of the Select Committee. Practical co-operation is a very important aspect, which I underline in my discussions with other EU members in relation to this subject matter.

I can tell my right hon. Friend the Member for Carshalton and Wallington (Tom Brake) that I have stated clearly in my letter to the European Scrutiny Committee that irrespective of whether the UK opts in to the directive, we will take an active part in negotiating the directive to shape it in the national interest. In response to the Opposition Front-Bench spokesman, the right hon. Member for Delyn (Mr Hanson), may I say that we have set out in our letter to the Select Committee our negotiation objectives? I will consider ways in which we may be able to share information with him on that and in relation to the representations that we have received from law enforcement partners in connection with the directive.

Ultimately, the risks posed to our domestic non-conviction-based confiscation powers are too great. We will seek to negotiate the directive into a more acceptable form and we will keep the progress of those negotiations under close consideration. We believe that the right approach is not to opt in at this stage, but to stay out and negotiate, to underline the need for continued focus on our international relationships in respect of asset recovery and to ensure that we have a robust system to monitor this. If necessary, I shall come back to the House in the future, should the situation change. At this stage we do not judge that opting in is in the best interests of our country.

Question put and agreed to.


That this House takes note of European Union Document No. 7641/12 and Addenda 1 and 2, a draft Directive of the European Parliament and of the Council on the freezing and confiscation of proceeds of crime in the European Union; and supports the Government’s intention to not opt-in under Protocol (No. 21) to the European Union Treaties at this stage.