Fraud Bill [HL]

My Lords, I welcome the support given by all noble Lords who have spoken to the Bill. I share with noble Lords the congratulations that they offer to the Law Commission. The value of the work carried out by the Law Commission is often undervalued. It is outstanding. We do not always accept everything it says and we do not always move to legislate for what it puts forward, but I am very glad that in this House we agree that this is a fine example and one that we are proud to put forward. I also agree with much of what noble Lords said about the policy behind the Bill. I agree wholeheartedly with much of what the noble Baroness, Lady Anelay, said and I am very happy, at least for these purposes, to be   counted as a friend. Whether the figure is £230 or £240 per head, it is an enormous sum of money that the country is losing as a result of fraud. As I said in opening, that is why it is important that we act in a number of different ways to protect the country and the economy better against fraud. In that respect my noble friend Lord   Brennan made some very important observations about fraud. What he said deserves close attention in the wider debate and consideration of fraud. I turn to some specific points raised by noble Lords. The noble Baroness, Lady Anelay, mentioned a reference in the Government’s response to the consultation paper to resources to deal with fraud. As the paper says, the Government were grateful for a particular offer that was made. I understand that that project is still under discussion. I see no reason why I should not identify by whom it was made: the Finance and Leasing Association. That association is having discussions with the City of London Police. Although that is welcome, it will be a relatively small project and not a major plank of our effort. Other matters are happening in relation to the resourcing. Overall resourcing for policing has increased. Expenditure on policing supported by government grant or central expenditure on policing has increased by 39 per cent—more than £3 billion since 2000–01. In the context of fraud, I refer to additional resources that have been provided by the Home Office and the Corporation of London, I am glad to say. I was instrumental in negotiating that for work by the City of London fraud squad, together with the Serious Fraud Office. I accept that there is an issue about the resources that have been applied to the investigation of fraud. There are a number of reasons why much fraud is not   prosecuted. The noble Baroness, Lady Anelay, referred to such an instance and I believe that further attention needs to be given to such issues. The noble Baroness also raised a point about Section 2(2) of the Criminal Law Act 1977. I do not believe that any noble Lord would dare regard the noble Baroness as a chattel or anything close to it. She need not have denied that. Reform of the 1977 Act is not an issue for the Fraud Bill, but—this is relevant to the other big debate that we have had this afternoon—the Law Commission is looking at the law of conspiracy more generally, as part of its codification project. It hopes to issue a consultation paper early next year. At the very least I shall ensure that the point made by the noble Baroness is fed into that consideration. I believe I am right in saying that that is an issue that is already in mind, but I shall need to confirm it. The noble Baroness may still wish to pursue the matter in Committee, as she is entitled to do. The noble Lord, Lord Thomas of Gresford, made an important point about the misery of identity fraud. He is absolutely right that identity fraud is an increasing and very serious problem. Therefore, he is right to say that it is important that the law is able to deal with the matter by having offences that adequately cover the circumstances. The noble Lord may not be surprised to hear me say from these Benches that dealing with identity fraud after the event is not the only answer. Preventing identity fraud is very important too. In relation to another Bill, which I shall not be presenting to the House—other colleagues will do that—a reliable form of identification will be under consideration. I say no more about that today, but I thought it opportune to make that observation. The noble Lord, Lord Thomas, raised important and relevant points about a number of the clauses. We shall refer to them in Committee, but he and the noble Lord, Lord Goodhart, raised a question on Clause 3. The reason for dropping the word ““wrongfully”” is precisely the reason given by the noble Lord, Lord Goodhart: that the Government accepted in the consultation that they should narrow the offence so that it was restricted to a case where there was a breach of a legal duty. The consequence of that was that the word ““wrongful””, which was then interpreted to include other things, was   not needed. I understand why the noble Lord, Lord Goodhart, wants to consider further whether the Government have gone too far in narrowing the offence. That may be a matter to which we shall return. On Clause 6, the noble Lord, Lord Goodhart, asked whether it was an offence of strict liability. I believe the   answer is no. It is not the intention for Clause 6 to   create a strict liability offence, as he said the Explanatory Notes say. The answer to his question may well lie in the fact that the particular words are followed by the words ““for use””. No doubt that is a matter to which we can return. The noble Lord also asked in relation to Clause 9 about who would be caught by the offence. It is intended that the existing case law on fraudulent trading under the Companies Act will apply to the fraudulent trading offence in Clause 9. Those include a requirement that the defendant has taken some positive steps in the carrying on of the companies business and that he exercises some kind of controlling or managerial function. The noble Lord may wish to return to that. On the same clause, the noble Lord, Lord Goodhart, asked what is meant by ““sole trader etc.””. I am sure he is right to say that it applies to any business and would include partnerships because it applies to any business not covered by the Companies Act 1985, which would include, not only sole traders, but also partnerships and trusts as well. The noble and learned Lord, Lord Lloyd, in welcoming the Bill, asked me to confirm that the Ghosh test will apply to dishonesty. He rightly noted that the test has had wide support and has been followed—although, as he rightly said, not yet by the Judicial Committee of this House. I can say that that is the current definition of dishonesty; it is referred to in the Explanatory Notes; no other definition is offered in the Bill. I cannot preclude your Lordships from in due course taking a different view and saying that Ghosh was wrong all along, but I have no reason to think that it is. That is the most assurance that I can give to the noble and learned Lord. My noble friend Lord Brennan, as well as making his observations on policy and implementation issues, which, as I said, were very important and worth noting, asked that we draw to the attention of the Lord Chief Justice the desirability, if there are appeals once the Bill is in force, that they should be dealt with swiftly so that uncertainty in the law is swiftly brought to an end. I am sure that he is right that that is important. It will be for the Lord Chief Justice to determine when and how to do that. If I may presume to say so, I should have thought that that suggestion will be treated as important and correct. My noble friend also asked about sentences for fraud. That is also an observation for the courts to consider. I have already attempted to deal with the specific points on clauses raised by the noble Lord, Lord Goodhart. He also made observations that it is important for us to take into account and have regard to. I turn to the issue raised by all noble Lords who spoke, which I had predicted would be a topic on which we would have discussion. I would not want to be so much of a spoilsport as to try to deal with all those important points today. I and the Government have been absolutely open about this. The Government saw the force of the points made in the Law Commission’s report. We put the matter out for consultation and received the responses set out. There is a point—perhaps of detail, perhaps not—between me and the noble Lord, Lord Kingsland. I rely on what the Government said in their response and draw to his attention paragraphs 39 and 40, which state, first in paragraph 39:"““The repeal of Common Law Conspiracy to Defraud was the only proposal to which there was widespread opposition””." Paragraph 40 goes on to say that,"““repeal was opposed by the majority of consultees””," which is also the information that I have received directly. I have not counted them myself; I do not know where the noble Lord’s information comes from; but we will obviously look into the matter. That is for a future date. I must say, however, that I—I do not take exception; I never take exception to what the noble Lord says—differ from the noble Lord when he described the Crown Prosecution Service and the Serious Fraud Office as pressure groups. They are in fact bodies charged with the duty of prosecuting in the interests of the public. If they have views on whether putting the law in one way or another will ease or make more difficult the prosecution of crime in this country, those are views to which we must pay full and proper attention. There are two issues, perhaps three, that we will need to consider when we return to the matter of conspiracy to defraud. The first is the practical value of the offence. We will need to explore that in more detail than is appropriate today, but I mentioned that in my opening speech. The second is whether there is conduct that would be caught by conspiracy to defraud that would not be caught by present offences. The noble and learned Lord   referred to a decision in Hollinshead. That was an example where the conduct involved was a number of people conspiring to manufacture devices that were then used to help people avoid paying for electricity. It was held by the courts that they—that is to say, the manufacturers—could not be found guilty of conspiracy to commit the offence of obtaining the electricity by use of those devices because they were not involved in the actual abstraction of electricity. I do not comment on whether the noble and learned Lord is right to say that the decision was a bad one, but it illustrates the problem that people may be involved in conspiring to do something but not in the substantive offence because that is done by a third party who is outside the conspiracy. That is one aspect that we will need to consider. My third point, on which I have already touched, is that the Law Commission is publishing a report on participation in crime.