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Proceeds of Crime Act 2002 (References to Financial Investigators) (Amendment) Order 2009

Volume 715: debated on Monday 7 December 2009

Motion to Resolve

Moved By

That this House notes with concern criticisms by the Chairman of the Police Federation of the powers contained in the Proceeds of Crime Act 2002 (References to Financial Investigators) (Amendment) Order 2009 (SI 2009/2707) laid before the House on 8 October and calls upon Her Majesty’s Government to revoke the order. 31st Report, Session 2008–09, from the Merits Committee.

My Lords, the Proceeds of Crime Act 2002 is 300-odd pages long. At its Second Reading, its complexity and disorder were commented on adversely by the noble and learned Lord, Lord Lloyd of Berwick. This complexity has made it more difficult to understand even than the constitution of the Holy Roman Empire in the early part of the 17th century; I know that as I have borrowed a history of the 30 Years’ War from your Lordships’ Library. My only regret in having made that comparison is that the late Earl Russell is no longer with us.

Section 68 states who may be financial investigators. They are defined as a police officer above superintendent and a customs officer above a certain grade—so far, so good. The third type was to be designated by the Secretary of State in statutory instrument. No one commented on this at Second Reading and the enabling clauses were passed undebated at both Committee and Report stages.

The powers of the financial investigators are wide and sweeping. I have no objection to that, even though the Joint Committee on Human Rights at that time thought that the seizure of criminal goods in the way in which the Act allows amounted to double punishment. However, the Government did not agree with that and passed the Act as it stands. The powers are admitted by the judiciary to be draconian and therefore should be used only to combat those serious criminals who organise drug smuggling or people smuggling. That was the stated objective at the time. It was not intended to include, as does the new list, those who dodge fares, those who fiddle pensions, those who are behind with their council tax or similar minor offenders.

It will be no good for the noble Lord, Lord Brett, to come to the Dispatch Box and read out a prepared piece of anodyne guff telling us that the powers will be used with discretion. They will not. The agencies are on to a slice of the money seized. The only time I have heard of such a thing before was when Bertie Wooster commented that Sir Roderick Glossop had had a slice of the fines that he imposed in the magistrates’ court.

Too many cases of official heavy-handedness have already occurred in the near past and there has been no confidence in the siren calls of official restraint. In a case where a chemist made a false prescription claim involving £464, under the existing Act £212,000 was seized from him. Luckily, that was quashed on appeal. We have seen anti-terrorist powers used to question tourists photographing St Paul’s. I believe that even the noble Lord, Lord West, was stopped under Section 44 of the Terrorism Act. We have seen local authorities using RIPA powers against people for putting rubbish into the wrong bins. We have seen these powers used against people for trying to send their children to the school that they want but which the local authority does not, against people for illegal fishing for eels in Poole harbour and against a punt operator in Cambridge for landing at the wrong place. Last, in this far from comprehensive list, one Stephen Clarke, who was standing near a manhole cover fiddling with his mobile telephone, was arrested. The police banged him up for two days, accusing him of taking photographs with a view to committing a terrorist offence. Happily, the magistrates acquitted him of any wrongdoing.

This general abuse of powers has increased and is increasing, but it has to be reduced, preferably to vanishing point. This statutory instrument repeals an earlier one passed last spring. That one added only Uncle Tom Cobbleigh and most to the number of financial investigators; this one rectifies the deficiency and the list now makes sure that Uncle Tom Cobbleigh and all have the powers.

This abuse of executive power was drawn to my attention by the Times. No one had noticed it until then. The Merits of Statutory Instruments Committee also had its attention drawn to it by the Times. Therefore, we owe that newspaper a debt of gratitude for doing something that none of us parliamentarians noticed, which we should have done. The Merits Committee then complained, saying:

“More importantly however, it gives some agencies (Counter Fraud and Security Management Service; Department of Health; Department of Regional Development in Northern Ireland; Gangmasters Licensing Authority; Home Office; Intellectual Property Office; local authorities; Serious Fraud Office; and Transport for London) powers they did not have previously”.

It points out with icy restraint that the lack of broad consultation on this instrument meant that the committee and, therefore, the House were,

“unsighted on the views of key stakeholders”.

The Home Office, in answering the lack of consultation complaint, said that as the powers had not been controversial it saw no need to consult those who had those powers under Section 68. Section 68 gives the Secretary of State the power to grant financial investigator powers to anyone he thinks fit. He should think long and hard before he doles them out. The Merits Committee also complained that the Government failed in the spirit of their own guidance.

The Law Society has written to the Home Office Minister, Mr Campbell, saying that it was of great concern to it to learn that these powers would no longer be restricted to serious organised criminal activity but instead would be able to be used against fare evaders, parking defaulters and bookmakers operating rigged betting rings. The Law Society said that it was even more concerned to learn of this change through the media and only after the statutory instrument had been passed by Parliament.

Paul McKeever, chairman of the Police Federation, is quoted as saying:

“The Proceeds of Crime Act is a very powerful tool in the hands of police and police-related agencies and it shouldn’t be treated lightly”.

He went on to opine that the public should be very concerned at the,

“behind-the-scenes creeping of powers”.

He could not be more right. There is a very serious principle involved here. The power of the state to seize people’s goods or to lock them up should be granted only after a full debate in Parliament with Ministers of the Crown making a concrete case for it, not by sneaky hole-in-the-wall statutory instruments. This is what the Government have done and, I hasten to add, not for the first time. It is a disgrace. I wish only that I had been able to ask the House to pass a fatal Motion and not one only of an admonitory nature. I beg to move.

My Lords, we are most grateful to the noble Earl for bringing this matter before the House. My Liberal Democrat colleagues in the Commons prayed against this order, but there are different procedures there and the matter was therefore not debated. We should also thank the media, as the noble Earl said, specifically the Times. We may not always regard the media as our friends, but they are part of the scrutiny process.

There is one thing to be said for the order. It sets out in full—including the added organisations—a schedule of the organisations and their relevant purposes whose staff may be accredited as financial investigators. This is the sixth version of the list. The schedule seems to have gone from three pages in its original version in 2002 to the current 18 pages. I have not had time to count the individual organisations.

I have a number of questions for the Minister. I hope that he has received my e-mail asking these—he indicates that he has. Why is this order needed, a mere six months after the last order? Have any agencies requesting these powers ever been refused in their request? What is the relevant training, if that is the term used, required for accreditation? I am aware that it is training by the National Policing Improvement Agency, but I am concerned, as the House should be, to know its content, length and so on. What monitoring and reporting mechanisms are there, both to monitor the detail and to provide us all with the big picture?

The Explanatory Memorandum published with the order is very useful. It tells us that various bodies will be,

“less reliant on more traditional law enforcement agencies, notably the police”.

It is significant that it was the chairman of the Police Federation who raised this issue. I suspect that he shares my view. Should not organisations such as Transport for London and local authorities be reliant on the traditional law enforcement agencies, notably the police, for things like the recovery of cash in summary proceedings? Before anybody accuses me of betraying my background, I have checked this out with the Local Government Association; I simply disagree with it about the extent of the powers. I am well aware that offenders can often be charged for a range of offences once they are picked up for an individual offence, but that does not seem to me to warrant what this order proposes. Search and seizure warrants in confiscation, money-laundering, civil recovery and detained cash investigations are serious matters on which to give so many organisations what are effectively law enforcement powers.

One of the agencies that now within the new remit is the Department for Regional Development in Northern Ireland. I mentioned this to my noble friend Lord Alderdice, who observed that currently this department is under the ministerial leadership of Conor Murphy of Sinn Fein. We seem to be unable to devolve policing and justice to the Northern Ireland Assembly, but we are granting these powers.

I do not suggest that crime is not serious. I accept that in some cases of serious crime powers of search and seizure can be effective. But who exercises the powers is, in our view, of fundamental importance. I do not want to be overly dramatic, but I could not help thinking that the extension of investigatory powers is a characteristic of totalitarian states of which in the past we have been rightly critical. It also occurs to me that such powers seem to have appealed to the worst in some individuals over the years, attracting the wrong people into particular services. Therefore, another question for the Minister is whether accreditation has ever been refused.

The noble Earl referred to the incremental extension of the powers. Along with bonuses and incentives, which he mentioned, that makes us uneasy. Of course agencies and organisations will want powers—this is why the local authorities want them—to carry out their jobs as effectively as possible. Consulting them and only them misses the point, as does the NPIA’s verdict that they are suitable to be given the new investigatory powers. More accurately, expecting the NPIA to give the assessment is not right. What should concern us is the big picture—bigger than the sum of the parts of the order. Why did the Government not consult widely on the development of the order, in accordance with their own guidance?

I am sure that I could have found the answer to my final question somewhere. I was intrigued by paragraph 11 of the Explanatory Memorandum. We know that the powers are intended to deal with the Mr Bigs, but paragraph 11 tells us:

“The legislation does not apply to small business”.

Perhaps the Minister can help me to translate that. We support the Motion.

My Lords, I also thank my noble friend Lord Onslow for raising the matter. As members of the Joint Committee on Human Rights know, he is a strong advocate of the rights of individuals and the liberty of the subject. This order is the most recent in a line of orders under the Act which have progressively added to the different bodies that can apply to have financial investigators appointed for the purpose under the Act. As he and the noble Baroness, Lady Hamwee, outlined, such investigators have considerable powers designed to recover the proceeds of crime.

I have no doubt that, on Second Reading on 25 March 2002, everybody in this House had in mind—as the Government had in mind—the recovery of large sums of money from major criminals. I am delighted that the noble Lord, Lord Rooker, is in his place. In his second paragraph in Hansard on that day, he said:

“The huge profits made from crime are often flaunted and give force to the old saying, ‘Crime pays’. This causes deep offence to hard-working and law-abiding members of the community and it makes harmful role models for our young people. Above all, the proceeds of crime provide the working capital for future criminal enterprise. Recovering the money must therefore be an inherent part of our crime reduction strategy”.

He went on to say:

“Another problem is that many major criminal figures have become untouchable by prosecution and confiscation. They organise or finance the criminal activity of others and then profit from the results”.—[Official Report, 25/3/02; cols. 12-13.]

That atmosphere prevailed and was shared by other speakers in that debate. The House was talking about major crime, major sums of money and major criminals.

The 2003 order which designated the first financial investigators referred to a number of different bodies, which have been added to over the years. Those bodies moved progressively away from the kind of crime that was in everybody’s mind when the matter was discussed. The order made earlier this year was in similar form to that which we are discussing this afternoon, but it did not include local authorities, among others. One reason for the amended order appears to be to remedy that omission. It is interesting that the original order came in in May and this one was brought in in October. In May, we talked about adding financial investigators who were members of staff of the Serious Fraud Office, the Gambling Commission, Royal Mail and the Office of Fair Trading. By October, we wanted to add others, and it is extraordinary that this could happen in such a short space of time. As my noble friend has indicated, there is a danger that the legislation is used for purposes for which it was never intended.

In saying that, I make no allegations of bad faith on the part of the Government, but Parliament—and we must all include ourselves—would be remiss if it did not stop this process at a much earlier stage. I do not even blame the individual organisations that have decided that, since the powers exist and you can get them by applying for them, they want their bit of the action. The blame rests with us, particularly those of us in a different part of this building who could have stopped the statutory instrument in its tracks, but which we cannot do. The Merits of Statutory Instruments Committee, as we have already heard, did not raise it in the first instance, but did do so at a later stage. I have no doubt that when powers are taken, they will be used, so the legislation must be drawn to ensure that that is not possible. As my noble friend Lord Onslow indicated, we have not been good at this. Anti-terrorism legislation has been used to stop people reading out the names of the dead at the Cenotaph and to freeze the assets of Iceland, thus alienating a friendly state and fellow member of NATO.

The House considered a code of practice following the Serious Crime Act 2007 which merged the Assets Recovery Agency with the Serious Organised Crime Agency, the body which authorises the appointment of these individuals. But it is my belief that the kind of powers that we have heard listed should be exercised by the smallest number of law enforcement agents possible and not handed out to anybody who thinks it would be convenient to have them. If other bodies want these powers, should they not call on the normal law enforcement agencies to exercise them? If they cannot do it, serious questions need to be asked about their organisation and funding. The extension over the years has been formidable, so that the number of bodies included in the order even managed to increase between May and October.

I want to ask the Minister this: under what circumstances and what kind of case is envisaged that would lead local authorities, the Post Office and Transport for London to want powers that were introduced to curtail,

“major criminal figures who have become untouchable by prosecution and confiscation”.

You need quite a lot of car parking tickets to come under that description. If my noble friend chooses to divide the House, I will support him, although it is in the nature of non-fatal amendments that it can only be a gesture. However, it may be a gesture worth making in this instance to demonstrate, at least at this stage, that we have noticed what has been going on, and to give notice to Governments of any persuasion that Parliament has noticed and that the future extension by statutory instrument of such extraordinary and considerable powers to organisations for whom they were not envisaged by anyone at the time that the initial power was provided in the Bill, will not be tolerated and should not occur again.

My Lords, I want to make a very short speech to say that this is really a technical problem. I speak as a member of the Joint Committee on Statutory Instruments, which meets every Wednesday to consider abuse of process and certain other reasons why we should report back to the department. I speak not for the committee but only from my personal experience. I would ask respectfully that we should not divide the House today. This issue should be returned for further consideration as to whether, in essence, it is an abuse of process. Frankly, I think that it is, but what I think is wholly irrelevant. This has to be considered properly and in due course.

There is little more to be said, other than that this should not be dealt with as if it is a singular, one-off occasion. Every Wednesday, we get at least one and sometimes four statutory amendments that are objected to for abuse of process, or for some other reason. The problem is that the departments have no written guide on how they should deal with them. Our advisers are highly intelligent and greatly informed—they were all from the Chancery Division in the old days—but frankly, these matters are difficult for us to understand. We are therefore in the position of having them to help us, but they should be helping the departments with written instructions on how they should deal with these matters. I am sorry to take your Lordships’ time.

My Lords, I have done the addition that the noble Baroness, Lady Hamwee, had not had time to do, and in addition to the police there are 22 other organisations. They include immigration, but also the Rural Payments Agency and so on. I am a member of the Merits of Statutory Instruments Committee, and I regret that we did not pick this up on the last occasion that a statutory instrument of a similar kind, but with fewer organisations, came through our hands early on this year. Nor indeed, I regret, did we pick it up on this occasion until, like others, we read the Times—and then we had another look at it.

One point which concerns me is that the government department did not go in for the standard consultation, which is the practice. One thing we look at in the Merits Committee is who is consulted and what they say about it. The reason that it did not consult was that there had been no earlier objections, and although there has been a significant increase in the number of organisations with these very wide powers, the government department did not think it necessary to consult this time because there had not been an objection earlier. From the letter from the Permanent Secretary, I hope that it will in future at least go in for the consultation process.

If these additional organisations were unable to have these extensive powers, it would be the duty of the police. Perhaps I might read paragraph 10.2 of the Explanatory Memorandum, with the heading “Impact”:

“The impact on the public sector is neutral. Most of the agencies listed already have accredited financial investigators. The bodies added will have previously had to rely upon the police to perform their investigations and so the actual manpower time will not increase. Investigation bodies will also receive a share of money recovered as additional funding to incentivise”—

a terrible verb—

“further work in recovering the proceeds of crime”.

I read that as an encouragement to go out and use these powers. I share the view of the noble Earl, Lord Onslow, and have real concerns about the considerable extension of these powers. It is valuable that he has brought it to the attention of the House; it certainly needs, at least, to be looked at.

My Lords, I am very grateful, as the House should be, to the noble Earl, Lord Onslow, for bringing this matter to our attention. To be very brief, over and over and over again I have heard speeches from Back-Benchers warning about Henry VIII clauses, and here we have the outcome. It is called mission creep.

My Lords, I feel compelled to contribute to this short debate. I support the Motion wholeheartedly, given that I was the shadow Minister steering the Bill through Parliament back in 2002. I remember that we debated at length the whole issue—the noble Lord, Lord Bowness, has referred to this today—of just how far these laws could be extended, and we were assured time and again that we were focusing on major crime and major criminals. It is deeply depressing that today we are discussing what amounts to our part in, frankly, a weak Parliament. The lack of proper scrutiny of the orders following the 2002 Act is lamentable, and we must all share the blame for that.

There have been no sufficient checks. That seems so strange; I remember in 1998, when I first came into this House, the Government introducing this word, “proportionate”. Everything had to be proportionate, but these powers are not. Everything also had to be “evidence-based”, but where is the evidence? And everything was based on “consultation”. We have just heard from noble Lords that there has not been proper consultation. I say again: there has been a lack of proper scrutiny, which has become so habitual and such a depressing issue when it comes to being a Member of your Lordships’ House.

The current policy under the memorandum is,

“to limit access to these intrusive powers to appropriate public (rather than private) bodies involved in financial investigation addressing public harm”.

Can we expect something a few months down the line to take this just one step further? These powers should be used only in extremis, and yet they will be applied with regard to common offences. That has to be a dangerous development. In a sense, this is all about more and more erosion of our normal freedoms. It is creating a real change in the culture of this country, which is deeply depressing.

We have had a number of examples today from noble Lords; I shall add one more. I keep hearing about photographers who are not allowed, or who feel unable, to stop in the street to take pictures because somehow they could be committing a crime. We are all beginning to feel that we are in a guilty state, which is appalling.

What will the checks be on the potential abuse of powers? Yes, there will be information on databases that will go astray—what will happen if it falls into the wrong hands? The Minister looks bemused by that, but it keeps happening; he has to accept that.

What about overzealous officials? The proceeds of crime will be shared by the CPS, police officers and courts, so of course there is an incentive here—it is sort of commission-based. On one level that is about the need for more efficiencies, as we were hearing about earlier, but we must take great care.

I ask the Minister and the Government: please be careful what you wish for. Freedom is such an easy thing to lose, and you rarely get those freedoms back without a revolution.

My Lords, I, too, contributed to the Proceeds of Crime Bill when it went through this House. I have also had some practical experience of the Act in operation. As previous speakers have said, it was designed to deal with large-scale crime and terrorism. The architecture of the Act is that an investigator seizes an individual’s assets, and it is then for that individual to prove that those assets are not the proceeds of crime. Was it seriously to be the case that the investigators employed by these various agencies—local authorities and so on—should have the power to seize assets and throw the burden of proving that they were legitimately obtained upon the person concerned? That is what the Act was all about. It had nothing to do with the trivialities that the order seems to have brought forth.

My Lords, it is now some 40 years since I was entitled to put the word “learned” before my name, so it is with some hesitation that I rise to my feet on this important issue raised by my noble friend Lord Onslow. The scale of the extension of powers, the random lack of definition of the extension of powers and the bland way in which they have been commended and accepted thus far startled me as soon as I became aware of them. The list of people to whom they are being extended runs to some 18 pages.

My reaction comes with one qualification: I have to declare an interest as a vice-president of the Trading Standards Institute and as president of the Consumers’ Association. The latter appears not to have been consulted about this and would expect to have been. For the Trading Standards Institute, the power to recover money as a surety for handling misappropriated goods has been useful. One should not therefore reject the concept altogether, although I understand why it raises serious anxiety among many of those who have spoken thus far.

There should be a fresh rethink about the order and its massive extension of powers. It does damage to a much more modest and cautiously exercised approach. What on earth might the late Graham Page have said in the face of this legislation? In my early days in the other place, his vigilance was sustained and effective. This House today has demonstrated comparable vigilance. It is a matter of great concern that these proposals have extended as far as they have without much more careful consideration. There may be some merit in some aspects of the order if properly exercised with due restraint, but for it to go through unchallenged would be shameful.

My Lords, I had not intended to speak in this debate; in fact, I have been very reluctant during the past year to comment on departments where I have quite recently served. However, the date on which I left the Home Office, 29 May 2002—it is the date when ODPM was formed, so I remember it well—is long enough ago. I am not familiar with the order, but I am astonished to learn that it is within the gift of departments to decide whether they consult. My experience from the four departments in which I have served since I have been in your Lordships' House is that there is strict guidance from the Cabinet Office about the rules that departments have to follow when consulting on changes. You have to get permission if you want to cut what would normally be the 13-week consultation period. If circumstances arise whereby you want to do it in six or eight weeks, you virtually have to get an override. So I am a bit surprised that it is possible for a department to say, “Well, no one’s bothered in the past. Therefore we can carry on and we don’t have to consult”. I really am surprised by that.

If I had come to this House for the Second Reading debate on 25 March 2002 and given a flavour of what would subsequently arise, I would have been given pretty short shrift because of the range of these powers. It is quite clear that there has been a massive extension.

It is just not on for government departments to be able to decide whether to consult on these issues. Rules on consultation are set down for the whole Government. To that extent, this looks like a failure in the conduct of public administration by the relevant department.

I fully accept that the means of fighting crime have to change. We will never be ahead of the criminals but, as the techniques change, we have to be as little behind them as possible. That is why the proceeds of crime legislation was passed in the first place.

My final point reiterates what the noble Baroness said about scrutiny. A couple of weeks ago, after the gracious Speech, I made that very point—that the reason why this place exists is the quality of the scrutiny it provides. I also mentioned half a dozen issues which I think we ought to examine in order to tighten up what we do. Because of the force of circumstances and time, the other place cannot provide that scrutiny. It looks at the great policy issues of the day but not at the detail; that is our responsibility. That is something that we should pick up and take forward.

My Lords, I have heard enough this afternoon to feel convinced that a further careful look at this by the Government is called for. I liked the notion of the noble Lord, Lord Campbell of Alloway, who suggested that we might not vote on the issue today and that the Government could take it away and look at it in some detail. Picking up on a point that was obviously troubling the noble Lord, Lord Rooker, the government departments have been following consultation rules which are apparently binding on them. That is something that ought to be looked at. I have a feeling that if we take a vote today, there may be a scene with which we are somewhat familiar. Various noble Lords will emerge from wherever they have retired to, not having had the benefit of hearing the debate, and vote in a way that might be predicted in advance. That would not be helpful. I think it is something that ought to be looked at here.

I should say that I knew only one thing about this. I happened to be sitting innocently in the Library the other day, working on a totally different project, when the noble Earl, Lord Onslow, came up to me and asked for some help in looking up some of these statutory instruments. I tried to help in the way that any lawyer would. I did not then form a view but I have formed one this afternoon. There is something here that really does need looking at.

My Lords, I congratulate my noble friend Lord Onslow on tabling this Motion. As he rightly said in his introduction, this order is not an innocuous piece of secondary legislation but one which raises issues of considerable importance about the powers of the state and the way that the Government choose to legislate. I can tell the noble Countess, Lady Mar, that the words “mission creep” occurred to me early on in my research for this debate.

The Minister must understand the concern that these powers are following the way in which other organised crime and anti-terrorism powers are being overused and abused. This stems from the fact that the Regulation of Investigatory Powers Act was originally used by only nine organisations. Now this has been extended to over 800; my noble friend Lord Onslow cited some of them. This order derives, of course, from the Proceeds of Crime Act 2002, which I accept immediately had considerable merit. It was presented at the time as the means by which the police and HMRC would be able to confiscate the ill-gotten gains of serious—note the word serious, as my noble friend Lord Onslow and others have—criminals.

There are few among us who would disagree that seizing a yacht or fleet of luxury cars from someone with no apparent income, other than, say, selling stolen artwork or smuggling drugs, is not an unsuitable response by the state. However, as has been mentioned over and over again this afternoon, the powers which are being awarded by this order are out of all proportion to the crimes which will be relevant. It is difficult in the extreme to consider, for example, housing benefit fraud in this context, especially as we know how often fraud and error are confused in social security benefits. The noble Lord, Lord Thomas of Gresford, is right: this is overprovision in the extreme.

As my noble friend Lord Bowness pointed out, the list of bodies which will henceforth be able to seize assets, freeze assets and seek the forfeiture of cash is quite surprising. Local councils in England and Wales will have this power. Royal Mail, Transport for London and the Department of Health, among others, will be given the appropriate power. At the commencement of the Act, that was a matter reserved for police and officers of HMRC. Under this order, these other “financial investigators” can step in and seize property if they—which presumably means their employees above a certain rank, details of which are stated religiously in the order—have been trained and accredited by the National Policing Improvement Agency. The noble Baroness, Lady Hamwee, commented on that. Does the Minister really think that that is a suitable arrangement?

The Minister may well argue that because training is to be conducted by the NPIA, there is nothing to worry about. That this training should take place goes without saying, but should it be provided in the first place to employees of councils, the Royal Mail and other organisations? This order marks a considerable accrual of powers to the state by spreading around powers that one would have thought should be the exclusive preserve of the police and HMRC.

Like my noble friend Lady Buscombe, I noted that, alarmingly, paragraph 7 of the Explanatory Memorandum to the order states:

“Current policy is to limit access to these intrusive powers to appropriate public (rather than private) bodies”.

Will the Minister confirm that it will never become policy to include private bodies in the list?

It is rather instructive to consider the comments of Paul McKeever, chairman of the Police Federation of England and Wales, in the Times. Those comments have already been well referred to. Moreover, an expert in asset recovery law has said that it is dangerous to place these powers in,

“the hands of someone less experienced and less skilled, particularly when combined with the incentive of their department collecting a share of the confiscated money”.

Given that only two years ago the Public Accounts Committee of another place criticised the lack of supervision of financial investigators by the National Policing Improvement Agency, which is to carry out this unspecified training, is this not an extremely valid concern? I am grateful to the noble Baroness, Lady Hamwee, for that point.

It is not enough for the Minister to respond that these powers will be used correctly and wisely. We know from past experience of this Government that unexpected consequences tend to turn up in their legislation. As we have heard, we have seen counterterrorism powers and surveillance laws used for purposes that could not possibly have been intended when the relevant provisions were drafted. For that reason, any extension of the powers of the state must be properly debated in Parliament. My noble friend Lord Onslow has, thankfully, given your Lordships' House that opportunity, and the Government would be well advised to take on board the concerns of noble Lords. The concerns include those mentioned in the report of your Lordships’ Merits of Statutory Instruments Committee, which should give the Government pause.

Concerns about the order have come to light elsewhere, but the Home Office does not seem to be particularly bothered. No consultation took place beyond asking the bodies that are to get the new powers what they thought. It is no surprise that they responded “Yes, please”. To paraphrase Mandy Rice-Davies, they would say that, wouldn't they?

The House will find it quite extraordinary that the police and HMRC were not consulted. Have they been consulted now? The committee also notes that by failing to consult more widely the Government have gone against the spirit of their own guidance on consultation, and I am grateful to the noble Lord, Lord Rooker, for pointing that out. That is far from satisfactory. No wonder we are about to have a Statement on smarter government.

This House prides itself on being a revising Chamber. However, revision is not appropriate for an order of this kind. That is why a better description of what we do is to advise—as my noble and learned friend Lord Howe has done—the Government of the day. The Minister has had such advice this afternoon. Unless we hear a convincing explanation, I am minded to recommend that noble Lords vote to support my noble friend’s advisory Motion, despite the hesitation of my noble friends Lord Campbell of Alloway and Lord Neill, for the simple reason that we know that under this Government there is no going back, and added pressure will be important.

My Lords, I think that it was the noble Lord, Lord Bowness, who paid tribute to the noble Earl for being a doughty defender of individual rights. I echo that; he is, indeed. Among his many attractive traits is that of never knowingly understating his case. I will therefore not comment on the Holy Roman Empire, the Thirty Years’ War or even Bertie Wooster. I hope that I will not give noble Lords anodyne guff. I will try to meet the genuine fears in people’s minds based on what they have seen in the past, and therefore fear might happen on this occasion. The noble Earl quoted part of an article in the Times of 28 October in which Paul McKeever, the chairman of the Police Federation, was quoted as saying:

“There is a behind the scenes creep of powers occurring here and I think the public will be very surprised. They would want such very intrusive powers to be kept in the hands of warranted officers and other law enforcement bodies which are vetted to a very high standard rather than given to local councils”.

This seems to be part of the fear that there is a diminution in the authority of the individuals carrying out such activities. Some people were slightly surprised that this issue had not been raised previously. However, it is perfectly understandable that the article in the Times drew your Lordships’ attention to the issue. I will try to allay the concerns that your Lordships have expressed.

The order deals with accredited financial investigators. These are financial investigators who are trained and accredited and subsequently closely monitored by the National Policing Improvement Agency under the Proceeds of Crime Act 2002. The Government believe strongly that seizing criminals’ assets is a key measure that improves public confidence in policing and the criminal justice system. There is strong public support for taking away criminals’ ill-gotten gains as well as evidence to indicate that criminals fear the seizure of their assets more than a term of imprisonment. Evidence from ACPO and the National Policing Improvement Agency also shows that using the skills of trained financial investigators contributes significantly not only to asset recovery but to combating a wide range of criminality.

As has been said, accredited financial investigators are not a new proposal. They have been in existence since 2003, following the Proceeds of Crime Act 2002, and have been using their financial investigation skills successfully since that time. There have been accredited financial investigators in local authorities since 2005. The latest order under the Proceeds of Crime Act simply extends some of the powers available to these investigators in line with powers already held by the police. These investigators, both within the police service and in other areas of law enforcement and the wider public sector, have therefore played an integral role in the recovery of the proceeds of crime since 2003.

The Government made amendments to the 2002 Act in Sections 78 to 81 of, and Schedule 2 to, the Serious Crime Act 2007, extending the range of powers of accredited financial investigators. The new powers that can be exercised by suitably accredited financial investigators therefore have full parliamentary approval. Noble Lords asked why there was less than adequate consultation. There were a number of reasons why this occurred. In hindsight, and given noble Lords’ contributions, it would have been wiser to have had wider consultation, but AFIs have been in existence since 2003 and the investigative powers of local authorities have been in existence since 2005. The extension of powers was provided for in the Serious Crime Act 2007. The statutory instrument issued earlier this year, SI2009/975, and the previous one, had attracted no parliamentary, media or other comment despite the fact that the Home Office Minister, Alan Campbell, wrote to Members of the Commons in December 2008, enclosing a copy of the earlier order, as those Members had expressed interest in the issue in earlier, unconnected debates.

What consultation did take place? In preparing the instrument during the summer months, Home Office officials worked in full consultation with the NPIA, the body with statutory responsibility to train and accredit financial investigators. The NPIA was satisfied that the new bodies listed in the order were suitable to be given new investigative powers and asked the Home Office to lay the new order. ACPO has said that the NPIA’s Proceeds of Crime Centre is held in the highest regard across the world and maintains very high standards of professionalism. The individual agencies have requested access to the powers and were also closely involved in settling the details of the order.

My noble friend Lord Rooker referred to Cabinet Office rules in respect of consultation. I am told that these do not apply to negative SIs as such, although I have to say that the plea from the noble Baroness, Lady Buscombe, that we should take note of that in future and that there should be consultation, represented wise words that I will take on board.

A number of other important points were made by noble Lords. However, I should like to deal with those at the termination of my contribution.

Accredited financial investigators’ powers can be exercised only by categories of persons approved by order of the Secretary of State, such as the one which we are discussing today. It is the Government’s policy to accord these powers to public bodies. In answer to the question of the noble Lord, Lord Skelmersdale, on whether the Government have any intention to extend these powers to private bodies, Ministers sought these powers only for public bodies. As the noble Lord well knows, no Government can bring perpetuity into a debate, but there is no intention in the Government’s mind to extend these powers to other bodies.

Why does that paragraph about the apparent possibility of extending these powers to private firms appear in the Explanatory Memorandum? Why is it worth saying, except to raise alarms such as those that I mentioned?

The alarm was raised, but I am seeking to give reassurance that it is not the Government’s intention, and it was not the Minister’s advice on this occasion, that the power should be sought other than for public bodies.

Presumably the Government have the power to appoint a private organisation. That is what one objects to most. These powers should not be given at all, except to very senior state powers.

If the powers were to be extended, they would be the subject of another statutory instrument and would, therefore, be brought to your Lordships’ attention, if not through noble Lords’ perspicacity, then via the Times. Perhaps I may continue.

Concern has been expressed over local authorities having these powers. But, for example, trading standards officers who are members of local authority staff already investigate intellectual property crime. This is not small beer. This is a lucrative business for criminals, which includes pirated DVDs, clothing, electrical equipment and so on. The most recent Intellectual Property Crime Report suggests that the criminal gain for intellectual property crime was around £1.3 billion in 2006. These powers are, therefore, an important addition to local authorities in their fight against crime.

Further, we are encouraging the use of these powers against all levels of crime. One of noble Lords’ concerns was regarding the fare dodger or the person who does not pay council tax. These are areas where, initially, the civil law is involved. The issue here is criminality, so there has to be a proposal to involve the criminal law. Currently, there are 1,282 AFIs: 621 are employed by police forces or are non-warranted police officers; 354 comprise Serious Organised Crime Agency staff; 107 are in local authorities; and some 200 are in other public bodies. We are adding four new bodies to the list of 22 which the noble Baroness kindly quoted—the Gambling Commission, VOSA, Transport for London, and the Intellectual Property Office. We expect that to increase the number of AFIs by six people.

The Minister has justified the powers for local authorities to deal with intellectual property, and has now said that the Government are adding the intellectual property agency, or whatever, as a body. I wonder why both bodies need those powers. While he is giving examples, could he perhaps cite cases of “major criminal activity” involving “major criminal figures” untouchable by prosecution confiscation that justify the powers of Transport for London and the Royal Mail? We would be grateful to know the sorts of crimes the investigators of these agencies would pursue.

I noted the point made in questions and will answer it in due course, if I may. I think that £1.3 billion in 2006 represents a considerable amount of criminal gain. As I was saying, we have added four new bodies and will add only another six AFIs. We do not anticipate that there will be a great expansion in the number of AFIs beyond that. There may be changes in that local authorities or other agencies may increase or decrease their AFI staff, depending on the areas of their involvement and what they are dealing with. I should add that we required the Intellectual Property Office to be included because it has a supervisory role to handle international and complex cases and needs investigative powers to perform the function. The order provides it with powers so to do. It will investigate cases that have passed the relevant local authority for prosecution, so there is an overlap. The IPO deals with the bigger cases that often go beyond local authority or even national boundaries. I hope that that helps the noble Lord.

As I was saying, there are some 1,282 AFIs, the vast majority of which—almost 80 per cent—are within the staff of the police and Serious Organised Crime Agency. Many of the posts in other bodies are held by former police officers. It is the Government’s view and that of those involved that any withdrawal from accrediting investigators would be a serious step back in the outstanding progress we are making to drive up the amount recovered in the past six years. In 2001-02, £25 million was recovered and £148 million in 2008. It is also important to note that there is proper judicial oversight.

My Lords, sorry to interrupt the noble Lord yet again, but could he tell us which organisations were responsible for recovering that money?

I do not have a complete list in my brief but I will happily seek the same and write to the noble Countess.

Judicial oversight exists. First, confiscation powers remain in the hands of judges, not the police or other financial investigators. A confiscation order can be made only by a Crown Court judge following a conviction for a criminal offence. The decision to restrain or freeze a defendant’s assets pending the possible making of a confiscation order can be made only by a Crown Court judge. An application for a search and seizure warrant has to be made to and approved by a Crown Court judge. When suspect cash is seized it can be further detained and forfeited only on the order of a magistrates’ court.

Essentially, many of the fears expressed by noble Lords should be allayed by two factors: that AFIs will be very well trained, which I shall come to in a little while, and that they will be very well vetted by the National Policing Improvement Agency. It is wrong to suggest that these new tools are being treated lightly. Investigators will have to be vetted to a very high standard.

The noble Lord, Lord Thomas of Gresford, referred to confiscation of funds. I understand that there was a fear that the officer who seized cash would then leave the person with the burden of proof that it was not criminal in origin. That is not the case. When an officer seizes cash, the burden is on the seizing body to prove criminality. A confiscation or investigation order will be issued on application to a judge. It is not the decision of the investigator. There are also the safeguards that I mentioned of NPIA monitoring and the code of practice. Therefore, we do not think that it changes the status at all.

With respect to the noble Lord, my point is that if Transport for London, through its investigator, goes after a person who owes it money and seizes the assets or asks the judge to confiscate the assets, the person whose assets are being seized has to prove, under the Proceeds of Crime Act, that he has come by those assets without crime—not necessarily the crime concerned, but any criminal activity. That is the architecture of the Act. Presumably, that means that the investigator for TfL pursuing a congestion charge fine, or something of that sort, will be able to apply for all the assets of an individual to be confiscated unless he can prove to the judge that he has come by them legitimately. Surely that is a wholly disproportionate extension of the powers.

It is with the greatest trepidation that I would cross swords with the noble Lord, whose extensive knowledge and experience of the law would expose my absolute lack of it, you might say. However, as I understand it, it is not the case that the burden of proof lies with the person on whom a freeze on their cash is sought. It is still for the prosecution to give good grounds to the court as to why that is. I will defer and seek further advice if the noble Lord is still insistent that that is the case, but that is not what my brief tells me.

My Lords, I am sorry to interrupt, but I want to affirm that the noble Lord, Lord Thomas of Gresford, is right. That is something that we debated at enormous length because we were deeply unhappy about shifting the burden of proof in this case.

In the face of which formidable argument and witnesses, I suggest that the best thing is that I take the question away to seek further advice on it.

If I may continue, I think that I have dealt with the issue of consultation, but a number of other important questions were raised. I shall seek to deal with some of them now.

On Transport for London, I do not believe that we are talking about congestion charges. First, congestion charges are not themselves a criminal offence, and criminality is the issue here; secondly, there may be major fraud issues between internal and external colluders, or certainly with external contracts, with an organisation such as Transport for London. You could even have something similar in the Rural Payments Agency. Those are areas of investigation for major issues of criminality; they are not intended for the person putting their bag in the wrong dustbin. I think that the noble Earl was seeking that reassurance.

The noble Baroness, Lady Hamwee, asked several questions, but one was about Northern Ireland. She said that we have not delegated policing to Northern Ireland, so how could this be delegated? The order is already in force in Northern Ireland; it came into force on 2 November. I am told that there is a separate list for Northern Ireland because it has separate agencies, which were consulted in Northern Ireland at the time of the order—although that may not help people here.

A number of other major points were made by the noble Baroness, Lady Hamwee. She asked why we are getting this order six months after the last one, to paraphrase. The first order this year followed three years of not having SIs. We do not want to overburden the House with numerous pieces of legislation to scrutinise, but that is not the case here. We stated the benefits of the powers to which accredited financial agencies should have access, in particular, the Serious Fraud Office and local authorities. Trading standards officers, in particular, had expressed their interest in the powers as part of their broader focus on proceeds of crime. They have both heavily invested in the expectation of the powers and wished to see them put before your Lordships' House at the earliest opportunity. Also, we have—as some may criticise the Government for having a tendency to do—changed the name of departments of state with some regularity. The Department for Business, Enterprise Regulatory Reform has been partially succeeded by the Department for Business, Innovation and Skills. Such changes are also reflected in the order.

Have any agencies been refused a request to be added to the list? The answer is no. The explanation is that the public bodies are sounded out by the NPIA and the Home Office if they declare an interest in having the powers. They are then sent a series of questions which they need to answer to justify their requirement for the powers. This tends to act as a steer for those who then pursue their inclusion or seek not to do so.

The noble Baroness asked who does the accreditation and what it consists of. It is an intensive course that has five levels of training depending on which powers an investigator wants access to. The courses begin with six weeks’ pre-course study to obtain the necessary knowledge. Passing an exam places an investigator on a five-day skills course. He then works in the workplace for 12 months and has to submit a portfolio of his work that is assessed by an operational/vocational qualified assessor. Accredited financial investigators are then intensively monitoring by the NPIA, which also delivers a continuous personal development programme. They are assessed by an independent assessor and trained as A1 assessors. In addition, the NPIA dips a sample of 10 per cent of those AFIs who have submitted their PDP each year. These dip samples take place in the workplace and involve an examination of the case papers that contain the supporting evidence for the online PDP submission, which then results in accreditation. Once AFIs have been verified, they move into continuous professional development, and a 5 per cent dip of those individuals takes place in the workplace each year. There is fairly intrusive continuous monitoring of individuals and the quality of their performance. If they fail, they can be removed. That has happened in two cases so far.

The noble Baroness’s final question was about Clause 11(1) of the Explanatory Memorandum, which does not apply to small businesses. She asked why it is there. I thought that was an interesting question. The powers to investigate the proceeds of crime and to execute warrants in the search for cash are obviously focused on the criminal. If a sole business is involved in criminality, it is possible that this will lead to an additional burden, but we make no apology for adding to that burden in cases where there is criminal activity. Many of the powers are not new and have been in operation for the past six years. We have received no complaints about any burden on or intrusion in small businesses.

A question was asked about this being misused by zealous local authorities or other public bodies, and I think this is noble Lords’ real fear. Criticisms about counterterrorism legislation being used by local authorities in unintended ways led to a circular from the Home Secretary making clear that that was not the case. If we were to find that that situation applied here, we would take similar action. However, we believe that with the involvement of the Home Office and the NPIA, there is ongoing monitoring which should mean that that should not be the case.

Finally, the Association of Chief Police Officers is very enthusiastic that this is brought into existence because it believes that it will relieve the police, who do not have the skills to deal with things such as fake drugs, some trading standards offences or some waste management offences. They can now be dealt with by people who have narrower expertise than police officers, which relieves the police of that burden.

My Lords, that being the case, and given the answer my noble friend gave me about the negative resolution, which I fully accept in terms of consultation, if I had put the possible use and extension of these powers to the House in 2002, it would not have bought the negative procedure and would have demanded the affirmative procedure. I do not expect an answer to this question now, but will the Home Office look at whether, if the situation we have today was envisaged in 2002, it would have put the affirmative procedure in the Bill? If that is the case, this ought to be looked at again.

Hindsight is powerful, but it is not powerful enough to go back seven years. How we deal with crime, and the crime that we have to deal with, is fast moving and continues to be a fast-moving series of events. The answer would have been no at the time. Clearly, today there is an issue. It is before your Lordships’ House. It has by the noble Earl’s determination been something that your Lordships have debated. I hope that we have allayed the fears that it will not be misused as people fear it could be—for people who were not paying the congestion charge and the like. It is important that we have these powers on the statute book, because they are requested by the very people who are currently dealing with these forms of crime. I hope that I have allayed your Lordships’ fears sufficiently for the noble Earl to consider withdrawing his Motion.

The noble Lord ended by saying he “hoped”. Hope springs eternal. It is worth summing up, as I understand it, what this debate has been about. It has not been about whether there should be powers to seize goods from the ungodly who have ungodlily taken them from the public. It has not been about getting the big drug barons to cough up their ill gotten gains. It has not been about big people cheating on intellectual property. It has not been about any of those things. It has been about whether the powers of the state are being unnecessarily increased.

The noble Lord, right at the end, said that the Home Office sent a circular round when it heard that the anti-terrorist powers were being misused. He hoped that was satisfactory. It was not satisfactory. People are still rocketed for taking photographs of St Paul’s Cathedral. When the man to whom this attempt was made complained to the police assistant—or whatever she was called—she said that none of the other people who she had told not to take photographs of St Paul’s Cathedral had complained. This insidious entry of powers by the Government to reduce the liberty of the subject is why we are here. We are here to protect those liberties—they are precious beyond anything. My noble friend Lady Buscombe picked up late again, when some of us were perhaps a bit dozy, on the Civil Contingencies Act. That was a happy little Act, which at one stage allowed a junior Minister to repeal habeas corpus while Parliament was in recess.

This is a habit that this Government have got into, and it is an appallingly bad habit. I thank immensely the noble Lord, Lord Neill, for helping guide me through the constitution of the Holy Roman Empire, because that was what he was doing only in its more complicated form. I say to him and to the noble Lord, Lord Campbell, both of whom I respect, that the reason I want to divide the House is because the Government perhaps might pay a little bit more attention if we divide the House than if we do not. The problem has not been allayed. My fears have not been allayed. Therefore, I wish to test the opinion of the House.