My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved accordingly, and, on Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Brougham and Vaux) in the Chair.]
Schedule 6 [Data matching]:
I advise the Committee that if Amendment No. 115 is agreed to, I cannot call Amendments Nos. 116 or 116A.
115: Schedule 6, page 68, leave out lines 12 to 21
The noble Baroness said: I shall speak to Amendments Nos. 116 and 117 as well. As has been remarked, if I had been minded to press the first amendment in the group, I then could not have addressed the other two. This reflects the complexity of this group. I would have preferred to assist Members of the Committee by unpacking it but I found it impossible to do so in Committee, where it is important to have a rounded debate on substantial issues. Therefore, as I remarked to the noble Lord, Lord Bassam, earlier today, I treat this very much as a probing exercise at this stage, but, because these are contentious issues—perhaps the most contentious in Part 3—I will listen carefully to the Minister’s response and consider how the amendments should be brought back on Report. The overall objective of this small but powerful group of amendments is to limit data-matching to serious crime, but it would substantially restrain an overweening power given to the Secretary of State to extend the purposes for which data-matching may take place.
At present, data-matching may be conducted only for the prevention and detection of fraud. That is achieved by the drafting of new Section 32A(3) in Schedule 6(2). It would amend Section 18 of the Audit Commission Act 1998. However, the same schedule inserts new Section 32G, entitled “Powers of Secretary of State”, which confers on the Secretary of State a power to extend the purposes for which data-matching may be conducted. Those powers can be extended by statutory instrument subject to the affirmative resolution procedure.
The Bill provides by way of illustration a non-exhaustive, broad list of additional purposes. It includes prevention and detection of all crime—with no restriction at all—the apprehension and prosecution of offenders and the recovery of debts owed to public authorities. The schedule therefore appears to give the Secretary of State an open-sesame password for extensive and possibly objectionable powers in the future. Our amendments would restrict those powers and ask the Government to justify their attempts to future-proof the Bill in this way, because it leaves the system open to abuse and could result in the inappropriate invasion of individuals’ privacy. The schedule effectively says, “Well, so far, we’ve thought of taking more powers in this way, but we won’t guarantee that we’ll stop there. Give us the powers to do as we please in the future”. That seems extraordinarily broad. As we have said repeatedly during our debates on the Bill, it is important to make the best use of modern data systems to detect or prevent fraud. However, we have serious reservations about the detail of the privacy implications of Part 3.
I suspect that the Minister’s full and informative answers on Part 3 so far will persuade us that we need to bring back only a small number of amendments for further elucidation. The noble Baroness said that she would write to noble Lords to answer those questions that we have not had time to address. However, we are approaching the core differences between us on Part 3.
Amendment No. 115 would restrict the use of data-matching to fraud by removing subsections (1) and (2) of new Section 32G, which provide the Secretary of State with the power to extend the purpose for which data-matching can be undertaken by increasing the involvement of private bodies in data-matching exercises and amending the Data Protection Act 1998. New subsection (2) provides the non-exhaustive list of additional purposes.
Amendment No. 116 would insert a new subsection to prevent the Secretary of State expanding the use of data-matching to include assisting the recovery of debt incurred as a result of serious crime. Amendment No. 117 would remove new Section 32G(3).
We are concerned at how the provisions of this part of the schedule could be used in the future. For example, will the Minister explain how the Bill would guarantee that the national identity register could not be used for data-mining or data-matching purposes, except in cases of serious crime? The Minister will recall our extensive debates on the Identity Cards Bill and her assurances regarding the use of the NIR where serious crime was involved.
When I looked at the Bill, I could not easily see the guarantee that I seek. My noble friend Lord Henley asked the Minister questions from another angle about the national identity register when he moved Amendment No. 110B last night, but he does not recall her answering those questions. I looked at Hansard this morning and did not find an answer, although it may be an issue on which she intended to write to my noble friend. However, today I seek guidance on where in the Bill I might find the guarantee that the information that is to be opened up to data-matching and data-mining by these provisions would not include the national identity register.
It is far from clear that any assertion that data-matching can prevent fraud is justification itself for the extensive powers in Schedule 6. The Delegated Powers and Regulatory Reform Committee pointed out in its report that it felt that the Government failed to justify fully the need for this power of modification in their Explanatory Memorandum. I would be grateful if the Minister could today provide that fuller justification that the Delegated Powers and Regulatory Reform Committee obviously felt should have been provided.
In this part of the Bill there is a strong case for saying that any changes by order are not appropriate and that we should seek to extend purposes only by way of primary legislation. Noble Lords have just seen a prime example of the limitations on this House in dealing with a statutory instrument. The noble Lord, Lord Trimble, moved what would have been a fatal Motion on Northern Ireland matters. I am not commenting on that; I abstained in that regard. The Minister will be aware that it is extraordinarily rare for my noble friends to vote on a whipped vote to kill a statutory instrument, which cannot be amended but only rejected. Of course, there may be free votes, but I have not taken part in the 10 years that I have been here in a whipped vote to kill a statutory instrument. It is so rare that when the Criminal Justice Act went through, the Minister will remember, the Government gave a specific assurance that, if a statutory instrument were brought forward to enable the abolition of jury trial in serious fraud cases, the Government would accept that my noble friends might well choose to vote down that statutory instrument.
It is not sufficient for the Government to say that there is an affirmative process. In some circumstances, with matters of constitutional importance, one may of course vote, but they are so rare that it is important always to see whether the procedure is appropriate. In this case, unless we have acceptable assurances—at the moment I cannot see how they might be—changes to extend the Secretary of State’s purposes, adding matters to the schedule, should be by primary legislation not statutory instrument. I beg to move.
As we come to the close of the Committee stage—not quite yet, but we are getting there—it is about time that I put on record my gratitude to the Minister of State and her noble friend for the full, detailed and courteous way in which they have handled these matters. That is one of the joys of this place, when one debates such matters. This is a serious Bill for serious crime—I apologise for the cliché, but it is an important Bill, and I understand what the Government are getting at. It is our job to try to redress the balance between the state and the private individual. Having said that, proceedings in this place seem so much more constructive, and there is an element of give and take that has been for some years rather absent in another place.
My name and that of my noble friend Lord Dholakia are attached to Amendment No. 115, which has already been covered extremely competently by the noble Baroness, Lady Anelay, and on which we have had discussions and briefings from Liberty. It would require Parliament to pass primary legislation to add further purposes for which data-matching or mining may be undertaken. As the noble Baroness, Lady Anelay, said, the reasons for such provision have been demonstrated. At present, the only purposes for which data-matching may be conducted are the prevention and detection of fraud. The Bill would, however, also confer a power on the Secretary of State to extend the purposes for which data-mining may be conducted. It also provides a non-exhaustive list of additional purposes including,
“the prevention and detection of crime … the apprehension and prosecution of offenders … the recovery of debt owing to public bodies”.
Data-mining may help to detect fraud and may also have benefits in relation to those other purposes. Nevertheless, as we have discussed and I have mentioned, it is far from clear that those benefits are sufficient to justify the sweeping invasions of privacy that indiscriminate data-sharing and data-mining inevitably involve. Given the serious privacy implications, it is important that Parliament retain strong powers to control the purposes for which data mining may be conducted. The Bill provides that any order to extend the purposes for which data-mining may be conducted would have to be approved by a resolution of both Houses of Parliament. We do not consider that sufficient in this context because of the limited time that is usually allowed to debate draft orders and particularly because Parliament would not be able to amend such an order.
The Government could, for example, propose that the following extra purposes be added: first, detection of serious crime; secondly, preventing terrorism; and, thirdly, identifying people who might be interested in taking part in a No. 10 policy forum. Parliament may agree that purposes one and two justify the invasion of privacy and that data-mining is correct in those circumstances but that purpose three does not. However, Parliament would not be able to delete purpose three and would have to vote for all or nothing. That is perhaps rather an extreme example in my notes but it brings home the point made so ably by the noble Baroness, Lady Anelay. I hope that the Minister will respond to the compelling points that we have raised.
I thank the noble Lord, Lord Burnett, and the noble Baroness, Lady Anelay, for exploring the issues as they have. I absolutely accept that the noble Baroness is trying to achieve clarity in understanding better how the provisions will work and whether it will be possible to make inappropriate extensions contrary to that which we have already said. I understand that her proposal to remove new Section 32G should be read in that context.
Although the list given in new Section 32G(2)—
“to assist in the prevention and detection of crime (other than fraud) … to assist in the apprehension and prosecution of offenders … to assist in the recovery of debt owing to public bodies”—
is an illustration, I hope that it demonstrates the potential value of leaving open the possibility of extending the scope of the valuable tool provided by the national fraud initiative. I thank the noble Baroness for indicating that she accepts the value of that initiative. She and other noble Lords have made that clear throughout, so we are at one.
This effective tool for identifying irregularities through data matching could, for example, have a potential role in identifying convicted sex offenders who are working with vulnerable adults and children. The noble Baroness will know that the names of those working with children or vulnerable adults can be checked against the sex offenders register and List 99. However, current checks are expensive and not as effective as they should be. Given the comments made so often in this Chamber, I cannot imagine that any noble Lord would want to discard a potential method of identifying those working with vulnerable people who should have been prevented from doing so.
Of a different level of potential seriousness, but none the less important, the national fraud initiative should, subject to parliamentary approval, be allowed to help recover public debt from persons who have left without making payment or giving any forwarding address. I do not believe that we should close the doors to such possibilities now.
The national fraud initiative requires only a limited amount of information from each data set that is held by a body. It does not indiscriminately swallow vast amounts of personal data in a way which may cause prejudice to innocent people. Instead, it carefully matches only the relevant information which has the potential to uncover where fraud, or possibly in the future, other crimes or irregularities, may have occurred.
It should also be remembered that the power to add the new purposes will be subject to the affirmative resolution procedure of both Houses. Of course, I hear what the noble Baroness says about that, but she and I have experienced this House’s increasing willingness to challenge, and its ability to do so when that is right and proper. I have never been slow to accept the reality of that position. One of the beauties of adding issues to the list by way of affirmative resolution is that the House has an opportunity to say “yea” or “nay” to such a change. The process is an increasingly powerful one and one which this House has not hesitated to take recently.
I endorse what the noble Lord, Lord Burnett, said—that this House, and increasingly the other place, are working hard together, particularly on these issues, to find sensible resolutions to problems. I have the happy advantage of having worked with the noble Baroness on so many Bills that they are too bountiful to recall, though some stand out with glowing memory. This is a very important safeguard, ensuring that any new purposes are appropriate and justified.
Amendment No. 116 offers an alternative to limiting these further purposes, which would extend the national fraud initiative powers beyond fraud only where it relates to the prevention and detection of serious offences as defined by Schedule 1 to the Serious Crime Act 2007.
Although it is certainly possible that data matching might assist in preventing and detecting these crimes, Schedule 1 does not set out an appropriate list by which to constrain the types of crime contemplated in extending the purposes of the national fraud initiative. Schedule 1 would not enable the commission to undertake data matching to identify where convicted sex offenders may have wrongfully gained employment working with vulnerable people. Nor would the commission be able to undertake data matching for the purpose of identifying the whereabouts of individuals who have absconded, leaving behind public sector debt, such as tenant rent-arrears owed to a local authority. Regrettably, the indications are that these sums are substantial.
It is important to remember not only what the national fraud initiative tool can do but also what it cannot do and what it is not. The Audit Commission has no intention or need to use this tool invasively to look into the lives of the law-abiding public or to extend this tool to private companies to collect debt owed by customers. The national fraud initiative is a flexible tool that could be adapted to serve the public interest—I emphasise, the public interest—not only in preventing and detecting fraud, as the Bill currently does, but in other areas, too, subject to Parliament’s future approval.
The noble Baroness mentioned the assurances we gave on the national identity register. Those hold true. The intention would be only to use the register to identify crime where a specific provision was made in the law introducing it, or where the Government had decided not to do so because its use would be voluntary. The Audit Commission would wish to use the register only for serious crime, in any event. I do not believe that there is any dissonance between the position that we explored when we discussed the national identity register and the current position.
The noble Baroness’s Amendment No. 117 would remove the power to add bodies subject to mandatory participation in the national fraud initiative. Currently, only bodies subject to audit and inspection by the Audit Commission are included on the mandatory list. Over time, reorganisations occur and governance and accountability can change at a local level. This clause allows the national fraud initiative to be flexible to such potential changes and, thereby, to keep pace with the developing ways in which criminals endeavour to take advantage of the public sector. Again, it should be noted that this power is subject to the affirmative procedure in both Houses.
I understand that the noble Lord, Lord Burnett, and the noble Baroness, Lady Anelay, are concerned about the apparent elasticity in this clause, but I hope I have gone some way to explain why it is essential that the national fraud initiative has flexible and appropriate powers at its disposal.
The noble Baroness pressed me on the justification for the further extensions. I hope that I have been able to persuade her that we require a flexible tool that can be used where needed and can allow cross-border matching. For example, we cannot now match between northern England and southern Scotland, which leaves a loophole for fraudsters to exploit. I am confident that neither the noble Baroness nor the noble Lord, Lord Burnett, would wish that to continue.
On the identification of people who wish to take part in the policy forum, which was raised by the noble Lord, Lord Burnett, giving that purpose to the Audit Commission could not be justified. He does not need to worry about that.
I hope that I have said enough to reassure the noble Baroness and the noble Lord that we do not need to return to these issues, but I accept that the noble Baroness will want to look carefully at what I have said, in addition to the issues that we explored in previous amendments. I accept that once she has done that, she may well wish to come back and hone any further amendments on Report. Before that, I would be very happy to discuss any of those issues with her, if she wished to do so.
I apologise for not being in the Committee when my noble friend moved her amendment. I had not intended to rise, except to say, as on previous occasions when we have debated these matters, that I wholly support what she said about the affirmative resolution procedure and the undesirability of giving extensive powers by such a route.
I am tempted to my feet by what the noble Baroness, in the course of her always helpful and thorough explanation, said about subsection (2). The clause raises a question about the use of the words “in particular”. The noble Baroness did not add clarity by saying that the clause sets out a number of items “by way of illustration”. I am not sure that we should have legislation “by way of illustration”. It seemed to me that her example of the convicted sex offender did not really add enlightenment. Surely, if the purpose is to assist in the prevention and detection of crime, other than fraud, the case of the convicted sex offender must already be covered. I ask myself, what is added? The same is true of her other example, the national fraud investigation review arrangements. Surely, that is covered by paragraph (c), which says,
“to assist in the recovery of debt owing to public bodies”.
I am rather puzzled by the inclusion of the words “in particular”. Surely we can be more straightforward than that and specify exactly what purposes may be added, particularly if they are to be added by way of the affirmative resolution procedure. I would be very grateful if the Minister could explain to me, a non-lawyer, in words of one syllable, exactly what we are gaining from this provision.
When the Minister was speaking about adding to Schedule 6 by way of an order, she defended that by saying that the House was increasingly emboldened to question orders. She suggested that, from time to time, the House might be very happy to kill an order. This afternoon we had a vote on a very important order, but the House did not approve the amendment, despite a considerable vote. In using orders for these very important purposes, are the Government really saying that they are quite happy for the House continually to question orders and to try to amend them? It seems to me that there could be a very uneconomical use of public time if the Moses Room was used for extensive discussion of an order and then there was another discussion in the Chamber on whether it lives or dies, with a rather unsatisfactory result. Are the Government really saying that they are quite happy for that to happen increasingly and often? I do not think I have heard a Minister say that before.
I wonder whether the Government realise just how worried people are about the identity register. The Minister has explained that it has a limited part in this Bill. I shall be interested to hear what my noble friend Lady Anelay says about that. Does the Minister realise that people are beginning to rumble what the identity register will mean and how it will operate. They have noticed that opinion is building up about that, which is making more people think about it. Are the Government being careful about this and do they realise that they are on delicate ground when they make it possible for the register to be used, for example, in this Bill?
First, I say to the noble Baroness, Lady Carnegy of Lour, that we are structuring these provisions carefully. She will see that safeguards in the Data Protection Act and other legislation are transferred and mirrored throughout the Bill in many ways.
Secondly, on affirmative resolution, I was certainly not exciting the Committee to become more rebellious; far from it. I know the sagacity and care with which the House of Lords scrutinises orders. I am suggesting that, to date, we have dealt with this consensually. Noble Lords have become accustomed to working in partnership, ensuring that issues can be agreed upon, often exploring them before they come before the House. When there is difficulty, with no consent or assent, it must be appropriate that we return to the affirmative resolution procedure to enable the House, if it is so minded, not only to challenge and explore the orders, but to—and I still invite the Committee to say “in extremis”—defeat them.
The noble Baroness’s experience in the House is far longer than and superior to mine, but she has probably experienced, as have I, occasions when an order has been debated and it has been decided, with great wisdom, that it would perhaps be preferable to withdraw it and bring it back another day in a manner with which noble Lords are content. That is how we do business here, a model increasingly being adopted elsewhere. I am by no means inviting her to construe my words as an opportunity for open rebellion.
The noble Lord, Lord Crickhowell, asks why we need the flexibility. My examples illustrated the breadth and nature of the issues currently in the list. The noble Baroness, Lady Anelay, framed her amendments to remove those because she wished to test what would be included or what might be gained by it. I appreciate that the noble Lord did not have the advantage of hearing the noble Baroness elucidate her points in her normal, skilful way, but she made it plain that it was to give us an opportunity to explore what those issues encompassed, and see whether the flexibility was or was not merited. I was responding to that invitation, and hope that I have illustrated why these issues would be helpfully dealt with in this way.
I remind the Committee that when we are dealing with situations like my example of the convicted sex offender, the mischief that we seek to address is not that they have a previous conviction, but to locate those with a previous conviction who may have slipped through the net and be working with children or vulnerable people when they should not. I know from the antipathy expressed towards such poor behaviour that noble Lords have always abhorred it, and wish to do everything they can to bring it to an end. That is why I hope that the noble Baroness feels it unnecessary to press her amendments, either today or at another time. I absolutely accept, however, that she will need time for proper reflection, as she has indicated.
Before we leave this point, I should say that I was specifically questioning “in particular”. If you leave those words out, the clause essentially means exactly the same. I am always suspicious about extra words in Bills in case they mean something that I do not understand. As I understand the new section, it specifies—with reasonably clarity for once—that:
“The purposes which may be added include”.
It is clear that there may be other purposes not specified, but why do we have “in particular”?
I hope I made clear that this is not a restricted, closed list, so it will enable us to add things in other areas. I understand that the noble Baroness is expressing concern and testing whether that is appropriate. The reason for “in particular” is to indicate that this is not an exclusive, closed list. The noble Baroness will have to consider what she thinks of that.
As ever, I am grateful to the Minister for her further elucidation. She will not be surprised that we are still adrift from each other to some extent. I will read and consider carefully what she said.
Amendment No. 115 was very broad and tried to remove the Secretary of State’s power to amend; it was a probing amendment. I am grateful to all noble Lords who spoke and supported the various aspects of the issues raised by my amendments. With regard to Amendment No. 115, the Minister said that there is potential value in leaving open an extension of the Secretary of State’s power, but one has to consider for whom there is value. Just because extending the power may be of value to the Secretary of State does not necessarily mean that it is justified or proportionate. It has to be valuable to the public and proportionate in the way that it is carried out. Otherwise, one could simply say that it might be valuable to the public to ensure that every person has his DNA registered at birth. That could be of value but is not something that we do now or that the Government have yet proposed—but I am not holding my breath because it may happen soon. These are the debates that one has to have before the Secretary of State has open-ended powers to extend his authority by way of order.
Amendment No. 116 limits the definition of serious crime to that in Schedule 1. I listened to what the Minister said, and she has a forceful argument. I do not expect that Amendment No. 116 will see the light of day again.
Amendment No. 117 refers to the list of bodies. I did not get a guarantee from the Minister that the national identity register could not be brought into play. She approached her assurances from a different angle—from what is currently in other legislation, rather than in this legislation. I will look carefully at whether there might be a more appropriate amendment that I could table for Report specifically to exclude the wrongful use of the national identity register.
We come to the issue that raised the most interest—new Section 32G(2)—which was particularly addressed by my noble friends Lord Crickhowell and Lady Carnegy of Lour. It sounds mild and technical, but it lists those areas that may, in particular, be added to the remit of the power of the Secretary of State to extend the purposes. One talks around this in technical language, but it really means that the Government are pre-empting our future ability to act in considering statutory instruments. My noble friend Lord Crickhowell questioned what “in particular” adds, and my noble friend Lady Carnegy of Lour tested out how receptive the Minister might be to a continuous succession of opposition in this House to the Government’s statutory instruments.
However, my concern is different. New Section 32G(2) states:
“The purposes which may be added include in particular”.
Why not do it now? If the Government say that the purposes in new paragraphs (a), (b) and (c) may be added in future, why do they not come clean now and try to justify that? Why are they leaving it to the future? If this House were to accept new subsection (2) worded exactly as it is by Third Reading and the Government later brought forward a statutory instrument that included new paragraphs (a) (b) and (c), could not they turn round to this House and say, “Well, it was in the primary legislation. You saw it then. Why are you complaining about it now?”. Would we not prevent ourselves later objecting to a statutory instrument that included new paragraphs (a), (b) and (c) if we let this part of the Bill go unamended? I ask the question at this stage because it is an unusual circumstance in which we find ourselves, and one I will have to consider very carefully. Why should we not be upfront and do this now? If not, why leave the provision there so that, in effect, the Government are asking us to sign up to new paragraphs (a), (b) and (c) and prevent opposition later?
Substantial issues remain that need to be addressed. I am grateful to the noble Baroness for saying that before Report she will, as is her custom, give noble Lords the opportunity to meet her to discuss matters of issue. I shall be grateful to take up that invitation. I notice that she wishes to speak.
I just want to assist if I can. I got the impression—and the noble Baroness will obviously have to think about this—that we are not adrift in relation to those three areas. They seem sensible, and from the indications I am getting she will agree. This is all new. We had hoped to have an opportunity to consult people more generally—stakeholders and others—to make sure we got the list right as to what to include. Although at first blush one could say, “Well, let’s include them now”, it would not allow us to hone those things to ensure that what we think looks sound at the moment is in fact sound after discussion.
I say that because the noble Baroness may need to think about it. We might all go, “Yes, that is a closed list”, and then find after we have spoken a little more that we would like to include things that at first blush we have not sought to include. That is the reason I rose to my feet. We could do a bit more work, which would make us all feel more certain that this is something complete.
That was helpful. The noble Baroness addressed three issues. First, there may in the end be no difference between us as to the proper inclusion of the illustrations listed in new subsection (2) but, if the Bill goes through and the data matching is extended, with that experience we may change our mind on those three matters. Secondly, the difficulty is that consultation has not taken place. We are not in a position properly to judge whether the three examples, new paragraphs (a), (b) and (c), in the list might be appropriate and valuable in the proper sense of the public good.
That brings me to the third point, and the difficulty I still face. In a sense the Government have made their life more difficult by giving the illustrative list in the schedule. That puts me in the position that, if I advise my noble friends that we do not oppose new subsection (2), I am essentially binding them in the future that they may not oppose a statutory instrument that brings it forward. I need to have that kind of discussion with my noble friends and the Minister, because I certainly have not come across a case where I am being asked to prevent opposition in the future to the contents of a statutory instrument, as was so clearly given as an illustration. In this case, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 116 and 117 not moved.]
Schedule 6 agreed to.
Clause 66 [Abolition of Assets Recovery Agency and redistribution of functions etc.]:
118: Clause 66, page 36, line 38, at beginning insert “Subject to subsection (3A),”
The noble Viscount said: The amendment is in my name and the names of my noble friend Lord Glentoran and the noble Baroness, Lady Harris of Richmond. My noble friend apologises to the Committee, but he is currently engaged on the Northern Ireland Bill that will come to the Chamber later this evening.
Clause 66 marks the start of the Government’s provisions to bring the work on the recovery of assets closer to the intelligence-gathering and investigative functions carried out by the Serious Organised Crime Agency. The Minister stated at Second Reading that that would allow for easier sharing of information and intelligence and would maximise the skill and expertise of both agencies. The Explanatory Notes state:
“On such day as an order under clause 66(1) provides, the Assets Recovery Agency (which is established by section 1 of, and Schedule 1 to, the Proceeds of Crime Act 2002 ... and the corporation sole that is its Director, will cease to exist ... Such an order is to be made by statutory instrument, but it is not subject to any parliamentary procedure ... Schedule 7 amends POCA and other relevant legislation to repeal or transfer functions currently conferred on the Assets Recovery Agency ... and its Director”.
“Schedule 8 enables the Secretary of State to make a scheme to provide for the transfer of both the Director and staff of the ARA together with its property, rights, liabilities and other matters to SOCA or the National Policing Improvement Agency”,
which was established by last year’s Police and Justice Act.
Amendments Nos. 118 and 119 would insert a new subsection to ensure that the transfer of the director, staff and everything else of the ARA can occur only subject to the director of SOCA locating within Northern Ireland a unit of SOCA responsible for asset recovery work specifically in Northern Ireland. The Northern Ireland Affairs Committee in another place said in its report Organised Crime in Northern Ireland:
“Paramilitary organised crime continues to threaten the stability of communities in Northern Ireland and poses a real threat to future political progress. We are deeply concerned by the control which paramilitary groups from both communities continue to exercise over those communities, the fear that this creates and the attendant negative consequences that this has for the reporting of organised crime”.
As my noble friend Lady Anelay kindly highlighted at Second Reading, my noble friend Lord Glentoran and I are concerned that the proposed merger will mean a narrower focus. The Police Service of Northern Ireland is particularly worried that that narrowing will effectively result in a reduced focus on Northern Ireland, with the risk, for example, that the intimidation of neighbourhoods and persistence of protection rackets in sectors of the local economy will simply not appear high enough on any scale of the SOCA priorities in London.
The House of Commons committee believed that the Assets Recovery Agency had made a significantly positive start within a short space of operational time. Indeed, it envisages the ARA continuing to play a key role in action against organised crime. Paragraph 40 of the report states:
“We welcome the growing number of referrals to the Agency, and the Agency’s assurance that it pursues all viable cases referred to it, regardless of whether the cases have a loyalist or republican link. We cannot stress enough the importance of the law enforcement agencies in Northern Ireland continuing to refer cases they believe can be pursued by the Agency”.
I also highlight the attention that the committee drew to the better success record of the Criminal Assets Bureau in the Republic of Ireland and the additional powers that the CAB there enjoys. I would be interested to know how the Minister envisages the proposed ARA-SOCA set-up working with the CAB.
Can the Minister inform the Committee whether the Government took into account that Commons committee report when drafting the Bill? Indeed, have they consulted the Police Service of Northern Ireland or the Government of the Republic of Ireland in considering the provisions in the Bill? I understand that both consider that Northern Ireland’s particular circumstances have been overlooked and are concerned that there will be a cut in the resources available for asset recovery work—resources that the committee considered inadequate in the light of the particular circumstances of Northern Ireland. What assurances can the Minister give us that resources will not be filtered away from Northern Ireland asset recovery work? Will she undertake to consider a review of the adequacy of the resources in the light of the Commons committee’s conclusions? It would seem to be an appropriate time if everything is to be merged.
I understand that Vernon Coaker has suggested in another place that the merged SOCA-ARA body will have a designated officer responsible for Northern Ireland. A designated officer is not good enough, especially if he or she is not even based in Belfast. Will the Minister please clarify the situation and explain why, if there is to be a designated officer, the Government have not considered maintaining a unit that is actually based in Northern Ireland, as the amendment suggests? It would be a great help if, in her reply, the Minister could confirm that the Government will transfer all the Northern Irish ARA responsibilities to SOCA. Alternatively, is there truth in the rumour that tax evasion work may be transferred to Revenue and Customs?
Asset recovery work is best pursued with the necessary dedication and vigour by people on the ground rather than by those based far away in London. It is essential that staff have an in-depth understanding of the history and peculiarities of Northern Ireland. The ARA has successfully built up a significant working relationship with the Garda and with units in the United Kingdom, the USA and beyond. Indeed, I believe that the measure of the ARA’s success is that it is said to be hated by the paramilitaries. It is essential that those who have built up working relationships with the police service and other key agencies there are not lost, thereby setting back work possibly for months, if not longer. The Minister acknowledged that the ARA has contributed to the total amounts recovered in recent years and has made a significant impact in disrupting serious criminal groups and freezing their assets. What commitment can she provide to the Committee that the service that the Government have provided for Northern Ireland will not be lost in the newly merged units?
In summary, we would like a dedicated unit, based in situ in a dedicated team with its own management and, most important, its own budget. We do not want a situation in which work cannot be undertaken in Northern Ireland because the budget has been used up in Birmingham. We also wish to make certain that the money recovered in Northern Ireland is reinvested in Northern Ireland. I beg to move.
I agree with everything that the noble Viscount, Lord Bridgeman, has said. We on these Benches support the amendments, to which I have attached my name. I shall speak in particular to Amendment No. 119. Merging the Assets Recovery Agency in Northern Ireland with the Serious Organised Crime Agency is an eminently sensible proposal. However, as the noble Viscount has said, simply having a designated officer with responsibility for asset recovery work there is woefully inadequate.
We know the magnitude of offences committed in Northern Ireland. Property and land assets worth millions of pounds have been directly acquired from crime and as a consequence of it. We have also heard of many other serious crimes, such as fuel smuggling, excise duty evasion and VAT evasion, to name but some of the criminal activity with which the Assets Recovery Agency has to deal.
The ARA does an absolutely excellent job, as the noble Viscount has said, and it deserves our highest commendation for the work that it has done. I commend it unreservedly. It is therefore vital that this work is built on and at the highest level. I believe, like the noble Viscount, that that means having a specially constructed and dedicated unit in Northern Ireland. Such a unit must be where it is all happening, so that this important work can be continued.
It gives me considerable pleasure to add my voice to those of the noble Viscount, Lord Bridgeman, and the noble Baroness, Lady Harris, in their praise for the work that the ARA has done on our behalf in Northern Ireland. It has done a superb job; there is no question about it. Therefore, I fully understand the implicit concern in the amendments of the noble Viscount that the current level of commitment to asset recovery in Northern Ireland should be maintained when the Serious Organised Crime Agency takes over the good work of the Assets Recovery Agency. That was the powerful statement coming through in what the noble Viscount and the noble Baroness, Lady Harris, said. I am happy, therefore, to repeat the earlier assurances given by the Government in this regard.
The Assets Recovery Agency is a success story in Northern Ireland. The new arrangements will not change that. We will still pursue criminals and their assets with the same force as we have done to date. I endorse the words of the noble Viscount, Lord Bridgeman, on how the agency has been of particular significance in Northern Ireland. That it is disliked so much is a badge of honour and not something of which it should feel the least bit ashamed.
We have made provision in paragraph 143 of Schedule 7 to the Bill that the Serious Organised Crime Agency must appoint and designate one of its staff as a person with responsibility in the organisation for asset recovery in Northern Ireland. In a letter of 1 March to Lady Sylvia Hermon in another place, my right honourable friend the Home Secretary said:
“SOCA are happy to confirm that the current asset recovery team in Northern Ireland will retain its distinct identity, and SOCA will ensure asset recovery retains an appropriately high public profile, reflecting the important contribution it has been making to crime reduction and community confidence”.
Our aim is that this will improve and enhance our efforts on the recovery of criminal proceeds. There will be no diminution in the resources available for asset recovery work in Northern Ireland, as all staff in the Assets Recovery Agency in Belfast will have the opportunity to transfer to the Serious Organised Crime Agency.
The agency will dedicate at least the same level of resource in Northern Ireland as the Assets Recovery Agency currently spends, and SOCA’s presence in Northern Ireland will be at least as large as the current office of the Assets Recovery Agency. As at present, asset recovery work in Northern Ireland will continue to be focused on local priority targets. The Northern Ireland public can be assured that the asset recovery effort will benefit from guaranteed resourcing. We shall be looking for challenging targets to increase further the performance in the Province.
I hope that we can agree that we have addressed the concerns in this amendment by the separate provision in the Bill requiring SOCA to appoint a member of staff with clear responsibility for proceeds of crime in Northern Ireland and by the earlier assurances that I have given. For these reasons, we are not persuaded that we need to make specific provision in the Bill as proposed in the amendment. Further, we are not convinced that a statutory requirement to set up such a unit of the Serious Organised Crime Agency in Northern Ireland would necessarily result in our achieving the most operationally effective way of tackling organised crime, or attacking criminal proceeds in Northern Ireland in the future. Rather, it could limit the director-general’s operational capability and flexibility.
For example, at some future date the director-general may wish the Assets Recovery Agency staff in Belfast who transfer to SOCA to be part of a larger unit with a wider range of responsibility linked to the recovery of the proceeds of crime in order to maximise their effectiveness. I would also question whether the director-general should be required to set up a dedicated asset recovery unit but not, for example, specialist units for other areas of SOCA activity in Northern Ireland, since the needs of Northern Ireland have to be met as broadly as anywhere else where SOCA will have responsibility.
For all those reasons, the amendments are not necessary, but we understand why they have been tabled. The noble Viscount and the noble Baroness are properly reflecting anxiety expressed in the Province because of the inherent risks that there always are when any of us contemplate change. It is absolutely right that we all want to achieve at least the maintenance of the high performance that we have now. We would like to do a lot better, and we believe that it is possible to do even better than we do now. Given that we have made express provision in the Bill for SOCA to have an officer assigned to, and with responsibility for, asset recovery activity in Northern Ireland, I hope that I have addressed the spirit of these amendments and that the noble Viscount will be content.
The noble Viscount also asked me specifically about the cross-border relationship with the Republic. I assure him that we have very good relations and welcome the close links that have been forged between the Criminal Assets Bureau and the ARA. We are committed to continuing this close co-operation when the ARA and SOCA are merged. We will legislate separately to enable better exchange of information between HM Revenue and Customs and the Criminal Assets Bureau on civil recovery of criminal assets, which will be a significant contribution to the combined efforts of the UK and the Republic against organised crime.
The Criminal Assets Bureau in Dublin and the ARA operate in different ways. As the noble Viscount has identified, the CAB is a different model. The CAB model works well in the Republic of Ireland because the organisations involved have a national remit. Northern Ireland is one region of the UK and organisations operating there, such as HMRC and SOCA, have UK-wide responsibilities that would not be devolved to a regional unit. However, the Organised Crime Task Force in Northern Ireland provides a vehicle through which all organisations engage and come together to co-operate, including on assets recovery. One sub-group of the OCTF looks specifically at criminal finance. I hope that I have reassured the noble Viscount that that is something with very much value, which we want to consolidate and improve on if we can. Those links have been very beneficial for the CAB and for us.
I hope that I have answered all the questions raised by the noble Viscount, but if I have neglected any, I will be very happy to respond further in writing.
I am most grateful to the Minister for that very comprehensive explanation, in particular her reassurance about relations with the Republic of Ireland. Even with the developments from, I hope, the passing of the Northern Ireland Bill today, Northern Ireland remains a very different place, particularly as regards the crime with which this amendment deals. I thank the Minister for her good intentions, but we are just a little worried about whether the Government will be able to deliver on this. I hope that I have had some reassurance on centralisation, about which we have had misgivings. I shall read very carefully the Minister’s reply.
Perhaps I may reassure the noble Viscount further. He is right that we are on the brink of significant changes in Northern Ireland. I reassure him that my honourable friend Vernon Coaker, who is dealing with this matter, and my honourable friend Paul Goggins in the Northern Ireland Office have had conversations in Northern Ireland with the Chief Constable of Northern Ireland about these concerns. We are taking these issues very seriously to ensure that they will be well embedded in any new structure that may arise. This matter is being given appropriate attention.
120: Clause 66 , page 36, line 40, at end insert—
“( ) SOCA shall, on an annual basis, lay before Parliament a report detailing the activities it has undertaken as a result of the functions conferred on it by this section which shall include—
(a) information on the sums of assets recovered; (b) information detailing from whom assets were recovered; and (c) information on the costs incurred in recovering assets.”
The noble Lord said: On his earlier amendment my noble friend Lord Bridgeman set out what Clause 66 seeks to do. This amendment is self-explanatory. It would insert a new subsection (3) requiring SOCA to lay before Parliament an annual report. Paragraphs (a) to (c) dictate that the report should include,
“(a) information on the sums of assets recovered;
(b) information detailing from whom assets were recovered; and
(c) information on the costs incurred in recovering assets”.
Members on these Benches recognise that the proposed merger of the Assets Recovery Agency and SOCA could be a matter of simple common sense but, following the merger, it is important that people know what is happening. Does not the noble Baroness agree that the work of the merged agency should be a matter of public knowledge and needs to be in the public domain? It is important that the issues listed in the three paragraphs of the amendment continue to be published so that the effectiveness of the combined skills of the agencies can be measured. Transparent monitoring is central to accountability. Although it might be a point of principle, could it be considered efficient, for example, if SOCA ended up spending more money on retrieving assets than the sum of the assets retrieved? One might expect a period of adaptation, but if it were to become an ongoing situation year after year, we would have to question whether the funds were being used in an effective and efficient way. That is what lies behind the amendment. I beg to move.
I agree with the noble Lord that it is entirely right and proper that the Serious Organised Crime Agency should be fully held to account for its performance on the recovery of criminal assets in the same way that the Assets Recovery Agency has in the past been held to account. However, I have to say to the noble Lord that we cannot support the amendment simply because we do not believe it is necessary. I hope that when I explain why I say that, the noble Lord will concur. Nevertheless it is right that this amendment has been moved because it gives me an opportunity to put the explanation on the record, as well as recording my assent to what he has said about the need for accountability.
Under Chapter 1 of the Serious Organised Crime and Police Act 2005, SOCA is already required to issue an annual report on the exercise of its functions. Paragraph 140 of Schedule 7 to this Bill includes an amendment to the 2005 Act so that one of SOCA’s statutory functions will be the recovery of assets. The Secretary of State must lay a copy of the annual report before Parliament, and Scottish Ministers must lay a copy before the Scottish Parliament. Under Section 7 of the 2005 Act, SOCA’s annual report must include an assessment of the extent to which its annual plan has been carried out, while under Section 6 of the 2005 Act the annual plan must include a statement of, among other things, current performance targets and the financial resources expected to be available.
The Assets Recovery Agency’s costs and revenue recovery data are at present published each year in its annual report. Similar information on the recovery of criminal assets will be included in the annual report of the Serious Organised Crime Agency when both bodies are merged. I hope the noble Lord will agree that it would be inappropriate and—dare I say?—a suboptimal use of SOCA’s resources, to require it to lay before Parliament a separate report specifically on asset recovery.
We should also bear in mind that SOCA is only one of a range of front-line agencies carrying out asset recovery work. The police, Her Majesty’s Revenue and Customs, the main prosecuting agencies and Her Majesty’s Courts Service are also major contributors to the delivery of the Government’s targets, so a specific annual report from SOCA on its asset recovery performance would present an incomplete picture of the overall effort. It is for those reasons alone that the amendments tabled are unnecessary, and I hope the noble Lord will feel content, if not happy—in fact, he might even be happy—to withdraw them.
As I read this amendment, I think I exactly anticipated what the Minister’s reply was likely to be. Indeed, I found myself almost writing it word for word. I have two questions. One relates to the amendment we have just dealt with about Northern Ireland, where we received an assurance that at least the same resources would be devoted to Northern Ireland as have been under the present arrangements. Are we likely to see any information that confirms or does not confirm that aspect covered in SOCA’s annual report?
The other question is: are there any changes in the responsibilities of SOCA resulting from this legislation that would not be covered under the existing annual reporting regime resulting from the 2005 Act, or is the Minister saying that the annual reporting obligations fully cover even any changes that may result from this legislation? If she is able to give that assurance, I for one am satisfied.
I am. When we merged the two agencies, we put in amendments to enable SOCA to perform its functions in a more comprehensive way. Therefore, everything that the noble Lord, Lord Henley, seeks with his amendment is covered by its annual report. I agree with him that that has to be done, and it is; it is done through a different vehicle, but it is there.
My noble friend Lord Crickhowell said that he exactly anticipated what the Minister’s reply was going to be. Her reply was that my amendment would be, and I hope I have got the words right, “a suboptimal use of resources”—in other words, a waste of time. At least, I presume that is what “a suboptimal use of resources” means, but the Minister, as always, was being polite to me. I shall remember that most of my amendments are a suboptimal use of resources. I shall possibly throw that expression back at her from time to time.
I listened carefully to the Minister. She seemed to be saying that SOCA was going to report the information anyway, but then seemed to be saying that it was not. For that reason, I was grateful to my noble friend. As far as I can make out, the report that comes out from SOCA will deal with the three points that are dealt with in sub-paragraphs (a), (b) and (c) of my amendment. With the Minister’s assurance in response to my noble friend, I will withdraw my amendment—but I will remember her words about suboptimality for some time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 66 agreed to.
Schedule 7 [Abolition of Assets Recovery Agency and its Director]:
120A: Schedule 7, page 74, line 14, at end insert—
“68A In section 417(2) (insolvency etc: modifications of the 1986 Act)—
(a) in paragraph (b) omit “or 52”; and (b) in paragraph (d) omit “or 200”. 68B (1) Section 418 (restriction of powers) is amended as follows.
(2) In subsection (2)—
(a) in paragraph (a) for “, 50 or 52” substitute “or 50”; and (b) in paragraph (c) for “, 198 or 200” substitute “or 198”. (3) In subsection (3)(d) for “, 52, 198 or 200” substitute “or 198”.
68C In section 419(2)(b) (tainted gifts)—
(a) omit “52,”; and (b) for “, 198 or 200” substitute “or 198”. 68D In section 420(2) (modifications of the 1985 Act)—
(a) in paragraph (b) omit “or 52”; and (b) in paragraph (d) omit “or 200”. 68E (1) Section 421 (restriction of powers) is amended as follows.
(2) In subsection (2)—
(a) in paragraph (a) for “, 50 or 52” substitute “or 50”; and (b) in paragraph (c) for “, 198 or 200” substitute “or 198”. (3) In subsection (3)(d) for “, 52, 198 or 200” substitute “or 198”.
68F In section 422(2)(b) (tainted gifts)—
(a) omit “52,”; and (b) for “, 198 or 200” substitute “or 198”. 68G In section 423(2) (modifications of the 1989 Order)—
(a) in paragraph (b) omit “or 52”; and (b) in paragraph (d) omit “or 200”. 68H (1) Section 424 (restriction of powers) is amended as follows.
(2) In subsection (2)—
(a) in paragraph (a) for “, 50 or 52” substitute “or 50”; and (b) in paragraph (c) for “, 198 or 200” substitute “or 198”. (3) In subsection (3)(d) for “, 52, 198 or 200” substitute “or 198”.
68I In section 425(2)(b) (tainted gifts)—
(a) omit “52,”; and (b) for “, 198 or 200” substitute “or 198”. 68J (1) Section 426 (winding up under the 1986 Act) is amended as follows.
(2) In subsection (2)—
(a) in paragraph (b) omit “or 52”; and (b) in paragraph (d) omit “or 200”. (3) In subsection (5)—
(a) in paragraph (a) for “, 50 or 52” substitute “or 50”; and (b) in paragraph (c) for “, 198 or 200” substitute “or 198”. 68K In section 427(3)(b) (tainted gifts)—
(a) omit “52,”; and (b) for “, 198 or 200” substitute “or 198”. 68L (1) Section 428 (winding up under the 1989 Order) is amended as follows.
(2) In subsection (2)—
(a) in paragraph (b) omit “or 52”; and (b) in paragraph (d) omit “or 200”. (3) In subsection (5)—
(a) in paragraph (a) for “, 50 or 52” substitute “or 50”; and (b) in paragraph (c) for “, 198 or 200” substitute “or 198”. 68M In section 429(3)(b) (tainted gifts)—
(a) omit “52,”; and (b) for “, 198 or 200” substitute “or 198”. 68N (1) Section 430 (floating charges) is amended as follows.
(2) In subsection (2)—
(a) in paragraph (b) omit “or 52”; and (b) in paragraph (d) omit “or 200”. (3) In subsection (5)—
(a) in paragraph (a) for “, 50 or 52” substitute “or 50”; and (b) in paragraph (c) for “, 198 or 200” substitute “or 198”. 68O In section 432(7) (insolvency practitioners)—
(a) in paragraph (a) for “, 55(3), 56(2) or 57(3)” substitute “or 55(3)”; and (b) in paragraph (c) for “, 203(3), 204(2) or 205(3)” substitute “or 203(3)”.”
The noble Lord said: This group of amendments deals with two issues under the Proceeds of Crime Act 2002. The Bill amends the Act to improve and extend its operation and efficiency so that we can build on its undoubted successes.
Amendments Nos. 120A and 133 are purely consequential on amendments already made in Part 1 of Schedule 7. Those amendments abolish the confiscation provisions in the Proceeds of Crime Act relating to the Assets Recovery Agency. This forms part of the merger of the Assets Recovery Agency and the Serious Organised Crime Agency.
The provisions in the 2002 Act providing for what happens to property, which is subject to both criminal confiscation and insolvency legislation, need tidying up. They still refer in places to the confiscation provisions which are to be repealed. Consequently, the cross-references in the insolvency provisions also need to be repealed.
Amendments Nos. 121A and 121B delete an unnecessary reference in Schedule 10. The schedule allows extension of the search, seizure, detention and forfeiture of suspect cash under the Proceeds of Crime Act from constables and officers of Her Majesty’s Revenue and Customs to accredited financial investigators. All operational staff of Her Majesty’s Revenue and Customs are covered by the term,
“officers of Revenue and Customs”.
The definition of this term is provided in Section 2 of the Commissioners for Revenue and Customs Act 2005.
Paragraph 11 of Schedule 10 provides for compensation to be paid by agencies in cash recovery cases. It provides that the commissioners for Her Majesty’s Revenue and Customs have compensation liability for accredited financial investigators who are members of staff, but not officers, of HMRC. This is an unnecessary provision and will be deleted. Section 302(7) of the Proceeds of Crime Act already provides for compensation to be awarded following the actions of officers of Her Majesty’s Revenue and Customs. I beg to move.
It is quite important because the Revenue and Customs applies to Scotland. If that has not been done, it is very strange. I hope that the Minister will do slightly more than send me a note and that, if necessary, proper amendments will be tabled.
121: Schedule 7, page 80, line 33, at end insert—
“(8) Any guidance issued or changes to guidance made under this section must be published and laid before both Houses of Parliament.”
The noble Lord said: This follows quite neatly our earlier debate on Amendment No. 120. Schedule 7, according to the ever-ready and wonderfully written Explanatory Notes—although they could have been improved by the noble Baroness—amends the Proceeds of Crime Act and other relevant legislation to repeal or transfer functions currently conferred on the Assets Recovery Agency and its director. Part 6 of the schedule inserts new Section 2A to ensure that the exercise of SOCA’s new functions from the Assets Recovery Agency must be in the way best calculated to contribute to the reduction of crime. In doing so, it must have regard to guidance set out in subsections (3) to (7).
Amendment No. 121 would insert an additional subsection into new Section 2A of the Proceeds of Crime Act which would ensure that any guidance issued or changes to guidance made under this section will be published and laid before both Houses of Parliament. The aim of the amendment is to probe the transparency of the work that SOCA will take over. Indeed, in the previous debate, I highlighted the fact that the work and procedures of the Assets Recovery Agency to date were relatively transparent, particularly when compared with SOCA, whose approach, as my noble friend Lady Anelay said on Second Reading, one might call “quasi-secret”. We need to question what impact these changes will have on how SOCA is currently run and to whom it will be accountable.
The amendment also offers the opportunity for a discussion on what might be included in the aforementioned guidance. Do Her Majesty's Government have targets in mind? They usually do—they are rather keen on targets. If so, how are we to see that such targets, or even the aims and objectives behind them, are being reached unless an annual report is published? Indeed, the argument works both ways. How can we judge if the annual report shows SOCA’s new powers are being used efficiently and effectively if we do not have sight of the guidance as a benchmark by which to measure them? I hope that the noble Lord can give more of an indication as to what the Government are hoping for in this guidance. I beg to move.
Although our names are not attached to the amendment, we on these Benches support it, for the very reasons that the noble Lord, Lord Henley, asserted so succinctly. It is for Parliament to have sight of any guidance issued to the various agencies in respect of how they are exercising their functions to contribute to the reduction of crime. There is no other way that we can measure the performance. It is important that this guidance is laid before both Houses to enable proper scrutiny.
I am very grateful to the noble Lord, Lord Henley, for moving the amendment. I think that I can satisfy his concerns and perhaps persuade him that it is not necessary.
Noble Lords know that reduction of crime and fear of crime, including organised and international crime, are key government aims. The Serious Organised Crime Agency and the main prosecuting bodies have an important role to play in helping to achieve those aims because of their role in attacking the proceeds of crime. SOCA and the prosecuting authorities will use their powers to remove illegally gained wealth from circulation. That will in turn disrupt organised criminal gangs by removing the money that fuels their enterprises.
Under this section of the Proceeds of Crime Act 2002, the Serious Organised Crime Agency and the main prosecuting authorities must exercise their functions under the Act in the way they consider is best calculated to contribute to the reduction of crime. In doing this, they must have regard to any guidance issued by the Secretary of State, the Attorney-General or, for that matter, the Advocate-General for Northern Ireland. The guidance must indicate that the reduction of crime is in general best secured by criminal investigations and proceedings. This principle must therefore underpin the way in which SOCA and the other relevant authorities under this section exercise their asset recovery functions.
The current guidance, under Section 2 of the Proceeds of Crime Act, which was issued to the director of the Assets Recovery Agency, provides that she must do her best to facilitate and promote criminal investigations and criminal proceedings. That guidance is published on the agency’s website.
I can give an assurance that the new guidance under this section will be based on the same principles as the current guidance. It will not, however, seek to influence decisions on which individual cases to pursue. There is no power for the Secretary of State to give such guidance, nor do we think it right or appropriate.
I can also assure Members of the Committee that the guidance will be published and copies will be placed in the Library of both Houses. However, it should not be necessary for the Secretary of State or the Attorney-General to lay the guidance before both Houses. There is no such requirement for the current guidance given to the director of the Assets Recovery Agency. Having given that commitment, I hope that the noble Lord will withdraw his amendment.
I have had an assurance from the Minister that the first half of my amendment will be covered in that the guidance will be published. Therefore, I probably have to accept that it would be a suboptimal use of resources to go that one step further and lay it before both Houses of Parliament. I therefore accept the advice of the Minister that my amendment is unnecessary. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 7, as amended, agreed to.
Schedule 8 agreed to.
Clauses 67 to 69 agreed to.
Schedule 9 agreed to.
Clauses 70 and 71 agreed to.
Schedule 10 [Powers to recover cash: financial investigators]:
121A: Schedule 10, page 95, leave out lines 32 to 35
121B: Schedule 10, page 95, line 37, leave out “another” and insert “a”
On Question, amendments agreed to.
Schedule 10, as amended, agreed to.
Clauses 72 to 74 agreed to.
Clause 75 [Extension of powers of Revenue and Customs]:
122: Clause 75, page 42, line 4, leave out “regulation of”
The noble Baroness said: The amendment would delete “regulation of” from the first line of Clause 75. Clause 75 merely introduces Schedule 11 and explains in parenthesis that it,
“makes provision about the regulation of investigatory powers of Her Majesty's Revenue and Customs”.
Schedule 11 contains 31 paragraphs. Four of them amend the Police Act 1997; 25 paragraphs amend the Regulation of Investigatory Powers Act 2000; and two amend the Commissioners for Revenue and Customs Act 2005. Not a single paragraph refers to the regulation of investigatory powers, notwithstanding the Title of the 2000 Act which I have just mentioned. Each and every one of them grants additional powers to HMRC.
I come from the call-a-spade-a-spade school of legislative drafting, and I hope that the Government will welcome my amendment because it would make plain what they intend with their Schedule 11. Schedule 11 is one part of a much broader initiative to increase the powers of HM Revenue and Customs. When HMRC was created out of the merger of the Inland Revenue and Customs and Excise last year, the existing scheme of powers was broadly maintained on the basis that there would be a review of them in due course. Before the merger, Customs and Excise had many more powers than the Inland Revenue. Many of us warned at that time that the review of powers would be an excuse for levelling them up, and we have been proved right.
I shall come to some substantive points about increasing HMRC’s powers in my later amendments, but, for the present, I wish with Amendment No. 122 simply to ensure that the Bill is honest in stating that it is increasing HMRC’s powers and not regulating them. I beg to move.
I hate to disappoint the noble Baroness, particularly on her first outing on the Bill today, but I must say to her that both the regulation and the scrutiny are important. Simply because the extension of the powers is referred to does not mean that the regulatory nature of the safeguards in Schedule 11 is in any way diminished. For that reason, I shall resist the amendment.
As the noble Baroness said, Clause 75 introduces Schedule 11, which makes changes to the investigatory powers of HMRC and is headed:
“Revenue and Customs: Regulation of Investigatory Powers”.
I get the impression that the noble Baroness is more familiar even than me with this schedule. Clause 75 states that Schedule 11 makes provision about the regulation of investigatory powers of HMRC. The amendment would change this so that Clause 75 referred to Schedule 11 as making provision about investigatory powers of HMRC with no reference to the regulation of those powers. This description of Schedule 11 would be inconsistent with its title and would not be as accurate as the current wording. Schedule 11 seeks to regulate as well as investigate: it relates to the regulation of the investigatory powers. I know that the noble Baroness has in the past emphasised the need for both. The current wording is accurate and allows the schedule easily to be identified from its description in the clause.
I thank the Minister for that reply. This is a warming-up amendment. I am not sure that the Minister responded to the points that I made. She said that regulation is not diminished by the schedule—I never suggested that it was. The only point that I was trying to make was that the schedule does not introduce regulation, except to the extent that some of the extra powers come with regulation attached. The purpose of the schedule, therefore, is not to introduce regulation; it is to increase powers, and it just so happens that a bit of regulation comes tagged on the back of them. That is why it is not honest to state in Clause 75 that this is what the schedule does. However, these are not points of substance for today and I shall not press them further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
123: Clause 75, page 42, line 5, at end insert—
“(2) The Secretary of State may by order make arrangements for the effective public scrutiny of the use by Her Majesty’s Revenue and Customs of the powers contained in Schedule 11.
(3) Schedule 11 shall not be brought into effect until the arrangements mentioned in subsection (2) have been put in place.
(4) An order made under subsection (2) shall not be made unless a draft of the order has been laid before, and approved by a resolution of, each House of Parliament.”
The noble Baroness said: The amendment deals in more substance with Clause 75 and Schedule 11. It would insert three new subsections into Clause 75. I shall speak also to Amendment No. 126, which would delete the major part of Schedule 11. These are probing amendments, designed to tease out some of issues about the extra powers that are being given to HMRC.
The Inland Revenue was equipped with powers which were appropriate to the paying of tax being a civil obligation. On the other hand, when Customs and Excise was set up, it was equipped with powers which were appropriate to policing our borders and dealing with the physical activity of smuggling. When we introduced VAT, it was, for reasons largely lost in the mists of time, placed with Customs and Excise rather than the Inland Revenue; hence, VAT attracted more extensive powers in relation to business taxation than have ever existed in relation to taxes dealt with by the Inland Revenue.
Both VAT and the Inland Revenue taxes are fundamentally civil obligations and for the vast majority of taxpayers the criminal law is irrelevant. The Inland Revenue worked well in the past by involving the police whenever criminal activity involving a tiny minority of taxpayers was suspected. It did not need police-type powers. The Chartered Institute of Taxation believes that there are important public policy reasons for the administration of tax and the enforcement of criminal law being conducted by separate agencies and that changes to that will strike at the heart of the nature of the relationship between taxpayers and tax administrators.
The Chartered Institute of Taxation believes that the extra powers for HMRC should not be sought until a fully independent review, such as the one conducted some years ago by the late Lord Keith, is carried out. The view is echoed by the Institute of Chartered Accountants in England and Wales, that if any directional change is made it should be to level down the powers of HMRC to the civil Inland Revenue powers, provided—and this is an important proviso—that the police and agencies such as the Serious Organised Crime Agency have sufficient powers to tackle the important areas of fraud and other criminal activity in relation to tax matters. I emphasise that no one suggests that a full battery of powers should not exist for tax fraud, especially with regard to organised crime. That is why I have tabled Amendment No. 126—so that the powers of HMRC are not increased. The Minister may be mystified why I left in the Bill the first four paragraphs of Schedule 11, which grant more Police Act 1997 powers. I can say only that it mystified me, too, when I came to prepare my speaking notes—but since this is a probing amendment, I decided that the amendment could stand for the purposes of today’s debate.
This is the first legislative opportunity for the Government to make their case on new powers for HMRC. I hope that the Minister will deal with the rationale for overturning the underlying premise, which is that the payment of tax is fundamentally a civil obligation that should be matched with appropriate non-criminal powers. I am aware that the Government have also announced that the Finance Bill will include some more levelling-up powers, which increases the sense of dismay among those who believe that the HMRC and the Treasury are pressing ahead without a proper independent review and without meaningful consultation.
I have little or no hope that that the Minister will accept Amendment No. 126 or even an improved version of it. Therefore, as a fallback position, I have taken the suggestion of the Chartered Institute of Taxation that if additional powers such as those in Schedule 11 are granted, there should be proper independent oversight mechanisms in place. My Amendment No. 123 addresses that point, adding a new subsection (2) to Clause 75, giving the Secretary of State power to make arrangements for the effective public scrutiny of how HMRC uses the powers granted in Schedule 11.
The amendment is not specific about the nature of the public scrutiny; clearly, there are many options available. I would say only that it should have a proactive scrutiny process and not a reactive one, such as with the adjudicator arrangements with the Inland Revenue, which are directed at specific disputes or complaints. Parliament would obviously want to satisfy itself that the scrutiny arrangements were appropriate, which is why new subsection (4) involves the affirmative procedure, and it would also be important that the new powers in Schedule 11 were not brought into effect until the scrutiny arrangements were in place. New subsection (3) provides for that.
I hope that the Minister recognises that concerns are felt about the development of HMRC’s powers. This debate is rather odd in connection with the Serious Crime Bill but, since the Government have chosen this mechanism to introduce the new powers for the first time, we feel that we cannot let this part of the Bill pass without a proper debate. I beg to move.
I shall say one or two words about both amendments. I am sympathetic to Amendment No. 123 and I think that my party would be, because we think it important that we ensure that there is an appropriate level of scrutiny for the exercise of these powers.
The noble Baroness, Lady Noakes, is right to say that the criminal law is rarely invoked in tax matters, which are usually dealt with on a civil basis, largely because it is very difficult to find 12 good people and true who are sympathetic to the demands of HMRC. That is different in respect of Customs and Excise, with which there have been many criminal cases. Nevertheless, the Revenue must have a full armoury of powers to deal with tax fraud.
Can the Minister explain why the HMRC powers are being substantially increased? None of us has any sympathy for tax evaders because, as I said last night, the more that is evaded, the more is paid by others. However, when the Bill was passed that merged the Revenue with Customs, there was considerable debate about culture in the two organisations. The Revenue culture has always been one of compliance by consent, which sometimes could not have been said of Customs and Excise. I should be grateful to hear a little more about this from the Minister. We shall consider her comments before Report.
I support my noble friend on this issue. I read with concern the evidence sent to a number of us by the Chartered Institute of Taxation, which is expert on this subject—much more expert than I am, as is my noble friend. The institute accepts fully that tax fraud needs to be investigated and that surveillance techniques may be required, but it points to the difficulty that sometimes may arise for individuals in distinguishing between the protection of Revenue and criminal activity and strongly urges that there should be a form of external monitoring of HMRC to ensure that there is no abuse of what is potentially a very intrusive power.
Among the most remarkable bits of evidence obtained in January by the Treasury sub-committee in another place was the fact that at that time in the Inland Revenue there were 20,000 people with power of arrest. It was welcome to hear that that number was to be reduced to about 2,000. None the less, as the institute points out, the situation had been allowed to grow so that there were 10 times the number of people with power of arrest than are apparently needed, which supports the case for effective monitoring of these organisations so that such a situation is not allowed to develop in future. The institute points out, too, that there seems to be nothing in the Bill or Explanatory Notes that positively restricts HMRC’s use of surveillance techniques to criminal investigations.
These are very extensive powers. This is a hugely powerful and, by its nature, intrusive organisation, which intrudes into all our affairs, though usually for perfectly proper reasons. But surely there must be very strong monitoring of such powers. For that reason, I strongly support my noble friend’s amendment.
My noble friends have raised very important points and we shall all listen with a lot of interest to what the Minister says in response to these huge issues. I want to ask another of my rather annoying small questions. The first four paragraphs of Schedule 11 amend the Police Act 1997 to bring the Revenue into the drafting, which previously referred only to Customs. However, the Police Act 1997 is not a Scottish Act. Are amendments intended to the relevant Scottish Act, too? Perhaps they are elsewhere in the Bill—I may be wrong.
I am happy to give the noble Baroness, Lady Anelay, a more comprehensive answer on these issues than perhaps I came ready to give. I see that the amendments are exploratory so that she can gain a fuller answer on the Government’s rationale. I hoped that I had partly satisfied her on Second Reading, but I am more than happy to assist the Committee at this stage as I think that it will help us as we go forward.
As the Committee will know, these measures are about making the existing surveillance powers of Her Majesty’s Revenue and Customs available against all tax crime where it is serious and organised. There are comprehensive safeguards around the use of these powers, which can be used only for investigations into serious crime.
The noble Baroness asked a number of questions, as did the noble Lord, Lord Burnett. The first was: why do we need the changes and what benefit will they bring? The changes are needed to allow HMRC to effectively tackle serious criminal attacks on ex-Inland Revenue taxes and tax credits. They will allow HMRC to more effectively tackle these crimes and bring the individuals involved to justice. When HMRC was established in 2005, Parliament made it responsible for investigating crime connected with taxes and duties, including serious crime. To tackle those crimes effectively, specialist knowledge of the taxes and duties is required as well as the investigative skill. As I think the Committee will agree, HMRC has that specialist knowledge. There are more than 50 police forces in the United Kingdom and it would be extremely difficult to equip them all with the tax knowledge needed to deal with these crimes. It could lead to a loss of economies of scale and a dilution of experience and knowledge.
The proposal to make these surveillance powers available for investigations involving ex-Revenue matters was covered in the HMRC consultation document published in March 2006. Of the 58 responses to the consultation, 15 commented specifically on making the powers available for the investigation of serious tax crime related to Revenue matters; and 11 of those 15 respondents supported the proposals providing that they continued to be subject to the same safeguards and controls. I can confirm that the safeguards and controls will be unaltered and the powers will be used only for criminal investigations into serious tax crime. The powers have been reviewed to see whether they are appropriate to HMRC. That review has considered these powers and fully consulted, and most people agree that these changes make appropriate powers available. We therefore think that the framework is sound.
As the noble Baroness will remember, when HMRC was set up, the powers of the Inland Revenue and Customs and Excise were transferred but ring-fenced so that they could be used only for the purposes for which they were previously used. Customs and Excise had access to those powers for criminal investigations but the Inland Revenue did not, so the situation was preserved. When Parliament considered the Bill to establish HMRC, it was announced that the powers would be reviewed and, where necessary, that appropriate changes would then be made, rather than making changes in haste. Those powers, as I indicated, are the ones that have been reviewed, and I have tried to give the Committee a little information about the consequences.
I know that the noble Baroness, Lady Noakes, and the noble Lord, Lord Burnett, will understand the serious crime that takes place in attacking tax credits and the way in which we now have to address those issues. I was glad to receive affirmation that that is seen as something that should be addressed and is of serious intent. Serious crime involves other ex-Inland Revenue responsibilities as well as tax credits; for example, serious crime can involve dishonest advisers, a professional preparing false income tax repayment claims, or gangs dealing in forged tax certificates. The powers are needed to effectively tackle those serious crimes as well as where tax credits are involved. The law ensures that the powers can be used only where they are proportionate and necessary to tackle serious crime. Where those tests are met, the availability of the powers should not depend on whether a serious fraud involves VAT or income tax. For example, at the moment these powers could be available where appropriate to tackle a VAT fraud involving £10 million, but would not be available for a fraud involving £10 million of income tax even where the criminal behaviour was the same. I know that noble Lords will see the unfortunate consequence of that.
The extension of the powers was appropriate, and they have been dealt with sensitively. The noble Lord, Lord Crickhowell, says that there is nothing to restrict the use of these powers to investigate serious crime. Legislation such as the Regulation of Investigatory Powers Act 2000 restricts the use of the powers to criminal investigations into serious crime, so that provision exists. It is not something about which noble Lords need to be concerned. The noble Lord also asked about training and whether the powers could be used for civil matters. The training provided to HMRC staff investigating serious tax crime and the stringent safeguards and procedures that come with these powers will ensure that the powers are used appropriately. The procedures ensure that any possible use of one of these powers is subject to strict internal scrutiny before an application can even be made for its use. The powers are used only where other methods of investigation have failed or would clearly not succeed in obtaining the intelligence being sought.
I hope that I have been able to reassure the Committee about the structures, the way in which the powers will be extended, and the fact that we see it as important to mirror the safeguards that have been created to reflect the new structure and new ability to bring further criminal activity under proper control by these provisions.
Amendment No. 123 concerns the public scrutiny of the use of these powers by HMRC. Several stringent safeguards—some of which I have referred to—and systems of oversight are already in place for these surveillance powers. Clause 75 and Schedule 11 make no changes whatever to those. In particular, use of the powers is already subject to scrutiny by the independent Interception of Communications and Office of Surveillance Commissioners, and the scrutiny provided by those commissioners covers the use of the powers by a number of agencies including HMRC and includes the publication of annual reports. There is also an independent tribunal to consider complaints about the use of these powers. HMRC is also subject to inspection by Her Majesty’s Inspectorate of Constabulary and is within the remit of the Independent Police Complaints Commission. We therefore think that further arrangements for scrutinising the use of these powers are unnecessary.
Amendment No. 126 would remove paragraphs 5 to 31 of Schedule 11. These paragraphs update references to Her Majesty’s Customs and Excise and the Inland Revenue in the Regulation of Investigatory Powers Act 2000. This amendment would not prevent the clause fulfilling its intended purpose of making the relevant surveillance powers available where appropriate for all criminal investigations by HMRC into serious crime. However, it would make the legislation difficult to understand and interpret. Although the powers would apply consistently to HMRC, they would still refer to Customs and Excise and the Revenue as though differences remained, which could lead to mistakes and misunderstandings.
For these reasons I cannot accept that amendment either, but I absolutely understand that the noble Baroness tabled them to give us a vehicle through which we could debate these matters, as she said. She is not suggesting that they are accurate or appropriate but they enabled a proper debate to take place. For the reasons I have given, I hope that she will be content to withdraw these amendments.
I apologise for interrupting but I realise that I did not respond to the noble Baroness, Lady Carnegy of Lour. I reassure her that I now have the Scottish position on every amendment. Therefore, she must feel free to ask about it, if in doubt. The measures that we are now discussing apply consistently across the United Kingdom and apply in Scotland in precisely the same way as in England, Wales and Northern Ireland.
I do not believe that it does. We scrutinised the Act very carefully to make sure that the provisions which referred to Scotland were included and that those areas where it was unnecessary to refer to Scotland were excluded. However, bearing in mind that I know that the eagle eye of the noble Baroness will scrutinise this further, we will certainly check it and I shall write to her so that she has the assurance that she needs.
I am glad that we have managed to put to rest the Scottish question. I shall be happy to read in Hansard what the Minister said on Amendment No. 123 and consider it before Report. I am grateful to the Minister for her full explanation on Amendment No. 126. It is good to get on the record the fact that these powers will be used only to combat serious tax crime. On that basis, I am happy to let the Conservative spokesman say a few words.
The noble Lord is very gracious in letting me decide what to do with my own amendments.
I thank all noble Lords who spoke and the Minister for her comprehensive reply. There are really two issues here. First, should HMRC have the additional powers? I made the points that were put by the very significant professional bodies involved with tax compliance. I hear what the noble Baroness says about consultation. There is a feeling abroad that HMRC has been judge and jury on the consultation on its own powers. HMRC issued the consultation document, considered the responses and decided what to go ahead with in legislative terms with HM Treasury, with which, as we all know, it now cohabits in Parliament Street. There is a feeling outside that there has not been the opportunity to have the kind of independent review that was undertaken by the late Lord Keith, as I mentioned, which resulted in changes to the powers of Customs and Excise on VAT.
That issue will not go away, as the other powers will be brought forward in other pieces of legislation, but if we put it on one side we come to public scrutiny; I thank the Minister for setting out the areas of public scrutiny. I should like to think carefully about that and take advice on whether the mechanisms for public scrutiny meet the concerns that have been expressed. I reiterate the contextualisation of those concerns—that we are shifting a fundamentally civil-based tax administration to a system which has very significant police powers. In the old days it was never a problem for the Inland Revenue to work with police forces as necessary, lending its expertise in tax matters to police forces investigating fraud and criminal matters. That system worked in the past. If we are to change it, that is a significant issue which requires proper public scrutiny. That is why I need to consider carefully whether the existing mechanisms meet that need. I am grateful to the Minister for setting them out in detail. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
124: Clause 75, page 42, line 5, at end insert—
“( ) The Commissioners of Her Majesty’s Revenue and Customs may delegate the exercise of the powers contained in Schedule 11 only to named officers who are considered by the Commissioners to have the appropriate seniority and skills and whose functions include the investigation and prosecution of serious crime.”
The noble Baroness said: Some of what I shall cover in moving this amendment was touched on briefly by my noble friend Lord Crickhowell on the previous amendment. In the previous group of amendments, I probed the need for the relevant powers and the need for some oversight procedures. Amendment No. 124 is a further probing amendment, which concentrates on who in HMRC may exercise the powers.
Amendment No. 124 proposes that the Commissioners of Her Majesty’s Revenue and Customs may delegate the Schedule 11 powers only to named officers who satisfy two tests: first, that they are considered to have the appropriate seniority and skills; and, secondly, that their functions include the investigation and prosecution of serious crime.
I said that this was a probing amendment. I do not think that it is quite right because, having looked again at Schedule 11, I see that some of the powers are granted directly to HMRC officers and not by way of delegation from the commissioners. The Minister will see, however, that my amendment probes the kind of HMRC officer who will in practice exercise the powers.
The Law Society has said that it is concerned that any use of the new powers should be authorised at an appropriately senior level. In the case of the police, the senior authorising officers are chief constables or the commissioners for the City and Metropolitan police forces. The Law Society believes that the Act should make clear the level of authority required for use of the powers. As I read the Bill, it is silent on that.
As we know, the powers in Schedule 11 are extensive. I hope that the Minister will agree that junior officers should not be entrusted with them. My noble friend Lord Crickhowell referred to the evidence given to the Treasury Select Committee in another place in January, when the astonishing fact was revealed that there were some 20,000 officers, presumably including some junior ones, but that that figure was to be whittled down to a smaller number. I hope that the Minister will place on record exactly what those plans entail and when they will be implemented. Will they ensure that the powers will be available only to officers who have the “appropriate seniority and skills”?
The second leg of my amendment focuses on the functions of the people who will operate the powers. The Chartered Institute of Taxation is concerned that the new powers, which may be appropriate and proportionate for the investigation of serious crime, may be inappropriate and disproportionate for the administration of the tax system and the protection of revenue. I understand that HMRC intends to separate its criminal and civil activities—if I may use that shorthand—and that the powers will be used only for the pursuit of crime and not by officers who are not concerned in that work. Will HMRC’s plans equate to the wording in my amendment and confine the powers to officers whose,
“functions include the investigation and prosecution of serious crime”?
In respect of both aspects of my amendment—confining the powers to those whose functions include investigation, and the appropriate level of seniority of officer—will HMRC’s arrangements be in place when Schedule 11 is brought into effect? It is important that people understand that robust arrangements will be in place when the powers are implemented. Indeed, is there any reason why these requirements should not be in the Bill to ensure that HMRC could never use the powers other than in accordance with this provision?
As I mentioned, the Chartered Institute of Taxation is genuinely concerned about a possible reduction in the right to privacy if information gleaned by HMRC officers dealing with the criminal side were to be shared with the civil tax administration side. It believes that there should be an absolute rule that someone who is involved in the criminal aspect should never be involved in the civil aspect. Going that far would never be realistic, but can the Minister describe the extent to which different activities within HMRC would be Chinese-walled? This matter strikes at the heart of the confidentiality between HMRC and taxpayers, and the civil nature of that relationship. Some clarification would be helpful. I beg to move.
I hope that the noble Baroness, Lady Noakes, will not mind if I speak for her. I have not had the advantage of a brief, either from the Law Society or the Chartered Institute of Taxation, although in the other place I received many briefs from them on countless Finance Bills. These powers are far-reaching and require to be exercised by individuals who are experienced and intelligent. The work is sensitive and complex and, if there is to be a delegation of functions, the Committee would wish to ensure that those to whom the functions are delegated are properly trained and are the appropriate people to carry them out. Perhaps the Minister can say which individuals will carry out this work and what qualifications they will have.
I understand the nature of the noble Baroness’s amendment and I shall try to concentrate not on its form, but on its intent.
Amendment No. 124 seeks to ensure that the Commissioners of Her Majesty’s Revenue and Customs may delegate the powers in Schedule 11 only to named officers with appropriate seniority and skills and whose functions include the investigation and prosecution of serious crime. I should make it clear to the noble Baroness that no officer of Revenue and Customs is responsible for prosecutions, as that is now the responsibility of independent prosecutors such as the Revenue and Customs Prosecutions Office. So we have that distinction and specialisation. Otherwise, the amendment could lead to confusion and prevent HMRC from using the powers at all for any matter, including where those powers are currently available for use by the department. This includes combating serious smuggling and tax crimes such as carousel fraud, about which the noble Baroness knows well.
In addition to that technical matter, applications to use these powers, as the noble Baroness is aware, are already subject to rigorous internal controls and authorisation procedures and, under administrative law, the commissioners can delegate their powers only to suitable officers. The powers in question are available for HMRC to use only to prevent or detect serious crime. Only five senior civil servants in HMRC’s criminal investigation section can authorise applications to use them. Each of those five officers has extensive experience of criminal investigations and the use of these powers.
For example, any possible application to a surveillance commissioner for approval to use intrusive surveillance must first be considered and approved by one of those five officers. Those authorising officers and the officers whose applications they consider are responsible only for criminal investigations and do not undertake other work, such as civil inquiries into tax matters. The noble Baroness asked how the Chinese wall works. That is how it works—and to some good effect.
Before approving an application, the authorising officer must be satisfied that human rights have been fully considered and that the action proposed is proportionate and necessary to tackle serious crime. Only after those stringent procedures have been followed can an application be made to an independent surveillance commissioner, who then considers the application.
I hope that I have explained how these issues will be dealt with. I know that the noble Baroness said that 20,000 people had the power of arrest and asked how that would be reduced. We hope that there will be an opportunity to look at that matter and to implement appropriate measures in the Finance Bill 2007. Powers will be available only to authorised officers who have appropriate skills and seniority. That is the result of the review that has given rise to these other proposals.
We do not believe that there will be the confusion that the noble Baroness and the noble Lord, Lord Burnett, were concerned about in terms of keeping the civil and the criminal issues appropriately separate. The law ensures that the majority of these powers can be used only to tackle serious crime, and HMRC’s stringent internal processes and controls will ensure that officers could not apply to use them in civil matters. Therefore, the system should work well. We have been very careful to replicate the existing stringent safeguards to address the mischief that the noble Baroness feared regarding the manner in which the powers might be used.
I am grateful to the Minister for that reply and I apologise for including in my amendment prosecution, which I know full well was separated out by the Commissioners for Revenue and Customs Act 2005. She said that five officers would carry out authorisations, but clearly a larger number of officers will be involved in using the controls. I was trying to find out whether, when the new powers come in, they will be used in more situations than are the existing provisions, which cover only matters in relation to the former Customs and Excise. Will the new provisions allow only senior people to authorise and use the powers?
A feeling of transition emerged from the evidence to the Treasury Select Committee in another place. At the moment, lots of people—presumably only those in the old Customs and Excise part of HMRC—have access to powers, and we are now reducing that number while increasing the scope. That would make it possible for inappropriate persons to use the powers, unless there was a clear transitional plan. Can the Minister say any more on that?
I can certainly assist in relation to how the system works at present. I suppose that the noble Baroness is asking how we operate the RIPA issues. The use of these powers is also subject to the rigorous internal tasking and co-ordination mechanisms that currently exist. Under Part 1 of RIPA, for example, the case being considered is placed before a committee of HMRC senior directors, who consider whether there is justification for the use of covert support. Regarding RIPA Parts 2 and 3, police applications are routed through internal line management and the covert assurance bureau.
The applicant must satisfy the authorising officer that HMRC has fully considered the subjects that we talked about earlier, including whether infringement of human rights is necessary and proportionate, and the authorising officer must believe that the actions specified to be taken on the ground are likely to be of substantial value in the prevention and detection of serious crime, as defined by law in both RIPA and the Police Act.
Within that context, these powers are rigorously managed, so that there is control and appropriate tasking for more junior officers to produce the information on which the more senior officers will make the decision. Quite tight internal regulation and mechanisms have been put in place. As now, the powers will be available only to appropriate and properly trained officers. We believe that systems are in place to ensure that that is delivered in a consistent way and to a high quality. These are very difficult and important issues, which traditionally have excited the most precise attention.
I thank the noble Baroness for that explanation. I would like to return to the bodies that, as I mentioned, have expressed concerns about this and invite them to consider the points made by the Minister. I am grateful for the trouble that she has taken to lay them out. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 75 agreed to.
[Amendment No. 125 not moved.]
Schedule 11 [Revenue and Customs: regulation of investigatory powers]:
[Amendment No. 126 not moved.]
127: Schedule 11, page 97, line 24, at end insert—
“The following amendments shall have effect only for the purpose of tackling serious crime and not for any other purpose notwithstanding any provision of the Regulation of Investigatory Powers Act 2000.”
The noble Baroness said: This is the last of my amendments, at least at this stage. The amendment concerns the additional powers in Schedule 11, which we have been discussing. When HMRC published its latest consultation document on its powers in January this year, it stated that it was the Government’s intention to extend various powers to former Inland Revenue activities now contained in Schedule 11. The document said:
“Ministers have decided to put the proposed extension before Parliament in the Serious Crime Bill. It remains the case that under the proposals these powers would not be available for use in any HMRC activity except criminal investigations into serious crime”.
The noble Baroness, Lady Scotland, repeated that when she responded to Amendment No. 123. My amendment seeks to ensure that that clear and unequivocal statement is in the Bill because, as far as I can see, it contains no such restriction.
The Minister will be aware that Sections 5 and 32 of the Regulation of Investigatory Powers Act go beyond the prevention or detection of serious crime. Those sections concern intercept warrants and intrusive surveillance respectively. They are also available for use in the interests of national security and the safeguarding of the economic well-being of the UK.
We are not clear that it is appropriate that those wider circumstances should be available to HMRC. It seems to us unrealistic to think that HMRC will be involved with matters of national security, but if any such issues arose, the proper course would be to involve the appropriate authorities which could themselves, if appropriate, seek to use the RIPA powers.
Safeguarding the economic well-being of the UK is, at first sight, an interesting idea. But we believe that if HMRC needs extra powers, they should be available only if the tax issues concerned raise matters of fraud. If we take the example of missing trader intra-community fraud—better known as carousel fraud, to which the noble Baroness referred earlier—it is clear that the scale of that fraud is of national importance and potentially harmful to the economic well-being of our country. But it is fraud, none the less, and the rationale for using such powers by HMRC would be fraud-based and would need no other justification.
The Minister will be aware that HMRC, with the encouragement of the Government, have been steadily blurring the distinction between tax avoidance, which is perfectly legal, and tax evasion, which is not. There is a concern that if HMRC were equipped with powers that went beyond criminal activity, it might start to interpret the economic well-being of the UK to encompass the use of tax avoidance techniques.
Let me be clear that we do not carry a banner for tax avoidance. We do not encourage or condone it. But it is not illegal and should not be exposed to techniques such as surveillance. HMRC already takes extensive powers in tax legislation to deal with tax avoidance—that is why our tax code is so long and complex and now rivals India’s as the longest tax code. But if powers designed for serious crime or seditious activity were to be used for more routine tax administration, that would raise big issues of the nature of the state's revenue-raising arm and such issues should at least be considered by an independent commission, as I referred to when speaking to the Keith Committee report on an earlier amendment.
I hope that the Minister will agree that these new powers for HMRC should be confined to issues of serious crime and that she will agree to my amendment. I beg to move.
I hope I shall be able to persuade the noble Baroness that her amendment is unnecessary. I understand the basis on which she puts it and her desire to see the words “tackling serious crime” on the face of the Bill.
Under the Regulation of Investigatory Powers Act 2000, the relevant powers, such as intercepting communications, are available for a number of purposes including those outlined by the noble Baroness; namely, where they are necessary in the interests of national security or for the purpose of safeguarding the economic well-being of the United Kingdom. Those purposes are mentioned in the Regulation of Investigatory Powers Act 2000 as the powers are available to a number of law enforcement and security agencies, some of which may need to use the powers for those purposes. However, the noble Baroness will know that HMRC only ever applies to use those powers for the purpose of preventing or detecting serious crime as set out in the Regulation of Investigatory Powers Act 2000. HMRC does not apply to use the powers for national security purposes or to protect the economic well-being of the United Kingdom as HMRC’s functions do not include those purposes and an application would be inappropriate and no doubt unsuccessful.
The amendment is also a little unclear in some respects. For example, it does not define what is meant by “serious crime”; it could be taken to be referring to the definition of that phrase in the Regulation of Investigatory Powers Act 2000 or it could refer to the different definition of that phrase in Part 1 of this Bill.
The amendment is unnecessary as HMRC can use those powers only for the purpose of preventing or detecting serious crime and the situation is completely unaltered by Schedule 11. The amendment may also inadvertently introduce uncertainty into when and how the powers can be used. I know that is not the intention of the noble Baroness. One has the definition of “serious crime”, as I have already said, in the Regulation of Investigatory Powers Act 2000. That definition provides that it is a crime involving an offence for which an adult who,
“has no previous convictions could reasonably be expected to be sentenced to imprisonment for a term of three years or more”,
or a crime that,
“involves the use of violence, results in substantial financial gain or is conduct by a large number of persons in pursuit of a common purpose”.
That definition is not the same as that which applies for the purposes of serious crime prevention orders in Part 1.
Safeguarding the economic well-being was made clear in the debate on the RIPA orders. It relates to activity similar to the security of the state and was, therefore, for authorisation of the intelligence services and not law enforcement or HMRC. The powers could not be used to tackle tax avoidance, only serious crime. I hope that that gives the noble Baroness the clarity she seeks.
I am grateful to the Minister both for setting that out and the confirmation that HMRC currently only uses the powers on serious crime. I think, however, that she has confirmed that HMRC could in theory use the powers for other purposes. It may be that an application is regarded as inappropriate today, but that may not be the case for all time.
The point is that HMRC can only exercise its power within its authority. It must act in the way in which it is currently constrained. I tried to explain that the provisions were brigaded in that way because a number of different agencies would use the same Act. Each agency would therefore be entitled to use those provisions, limited to the authorisation given to them by virtue of their nature. HMRC’s role is therefore constrained as I have indicated. It would not be able to use its powers on the two other categories; that would be outwith its jurisdiction.
I am grateful to the Minister for clarifying that, but whether HMRC’s functions could not fit within the economic well-being of the UK remains untested. I hear what the Minister says about how it would be interpreted today, but that is not my point: we are leaving in the Bill the possibility that the powers could be used other than on serious crime. If that is not a problem, I hope that the Minister does not resist the principle of an amendment limiting the powers to serious crime if that is honestly what the Government seek to achieve with the Bill.
I am grateful to the Minister for explaining why the amendment is imperfect. That will help me to refine and hone it for a later stage of our proceedings. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 11 agreed to.
[Amendment No. 128 not moved.]
Clause 76 [Orders of the Secretary of State and the Scottish Ministers]:
[Amendment No. 129 not moved.]
129A: Clause 76, page 42, line 18, after “56(3)” insert “, 62”
On Question, amendment agreed to.
[Amendments Nos. 130 to 132 not moved.]
132A: Clause 76, page 42, line 26, leave out “, 61 or 62” and insert “or 61”
On Question, amendment agreed to.
Clause 76, as amended, agreed to.
Clauses 77 and 78 agreed to.
Schedule 12 agreed to.
Clause 79 agreed to.
Schedule 13 [Repeals and revocations]:
133: Schedule 13, page 106, line 43, column 2, at end insert—
“In section 417(2)— (a) in paragraph (b), the words “or 52”; (b) in paragraph (d), the words “or 200”. In section 419(2)(b), the word “52,”. In section 420(2)— (a) in paragraph (b), the words “or 52”; (b) in paragraph (d), the words “or 200”. In section 422(2)(b), the word “52,”. In section 423(2)— (a) in paragraph (b), the words “or 52”; (b) in paragraph (d), the words “or 200”. In section 425(2)(b), the word “52,”. In section 426(2)— (a) in paragraph (b), the words “or 52”; (b) in paragraph (d), the words “or 200”. In section 427(3)(b), the word “52,”. In section 428(2)— (a) in paragraph (b), the words “or 52”; (b) in paragraph (d), the words “or 200”. In section 429(3)(b), the word “52,”. In section 430(2)— (a) in paragraph (b), the words “or 52”; (b) in paragraph (d), the words “or 200”.”
“In section 417(2)— (a) in paragraph (b), the words “or 52”; (b) in paragraph (d), the words “or 200”.
In section 419(2)(b), the word “52,”.
In section 420(2)— (a) in paragraph (b), the words “or 52”; (b) in paragraph (d), the words “or 200”.
In section 422(2)(b), the word “52,”.
In section 423(2)— (a) in paragraph (b), the words “or 52”; (b) in paragraph (d), the words “or 200”.
In section 425(2)(b), the word “52,”.
In section 426(2)— (a) in paragraph (b), the words “or 52”; (b) in paragraph (d), the words “or 200”.
In section 427(3)(b), the word “52,”.
In section 428(2)— (a) in paragraph (b), the words “or 52”; (b) in paragraph (d), the words “or 200”.
In section 429(3)(b), the word “52,”.
In section 430(2)— (a) in paragraph (b), the words “or 52”; (b) in paragraph (d), the words “or 200”.”
On Question, amendment agreed to.
Schedule 13, as amended, agreed to.
Clauses 80 to 82 agreed to.
House resumed: Bill reported with amendments.