Serious Crime Bill [HL]

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 32. Before I get into the body of the commentary on these amendments, I ought first to apologise to the House for the fact that this amendment was not brought forward during the Bill’s original passage through your Lordships’ House. I would not normally be seeking support for an amendment made in another place which brought forward such substantive policy at a late stage in a Bill. It is deeply regrettable that that is the case, but the logic of the Bill is such that it is appropriate that this amendment be made at this point. I shall explain why this is the case. I hope that the House will allow me to explain—I will go carefully through the arguments—why the amendment warrants inclusion at this point. In taking through this Bill, my colleagues, the Attorney-General and, in another place, Vernon Coker, have tried to listen carefully to the views of Parliament and stakeholders to ensure that any improvements that could be made to the provisions were made. We have also continued to look at how similar provisions have worked in other jurisdictions; we have of course had some discussion about that on the first group of amendments. When researching how the United States operates its Racketeer Influenced and Corrupt Organisations Act—legislation it uses effectively to combat the mafia—it became apparent that there might be a way to improve how the Bill provided for the enforcement of serious crime prevention orders in relation to organisations. We looked at some of the provisions which had been effective in the United States and worked to translate some of the ideas contained within them into this jurisdiction. This was obviously a complicated process, and one which, as noble Lords would expect, took some considerable time. We were concerned to ensure that all appropriate safeguards were carefully put in place and that any provision we brought forward was in compliance with our ECHR obligations. We also wanted to ensure that it fitted with the approach that had been put forward in the Hampton review and, following that, by Professor Macrory in his report Regulatory Justice: Making Sanctions Effective. Professor Macrory advocated that regulatory sanctions were consistent with, and appropriate for, a risk-based approach to regulation as set out in recommendation 8 of the Hampton review. The Hampton review recommended that the penalty regime should be based on the risk of reoffending and the impact of the offence, with tougher penalties for rogue businesses that persistently break the rules. While we are talking about involvement in serious crime, there is a significant read-across between the approach he advocates and the innovative and targeted approach we have brought forward with these amendments. They sought to address the fact that businesses can be effectively used by serious criminals, either as little more than fronts for serious criminal behaviour or as a means of concealing serious criminal activity from law enforcement. Businesses can be in more than one place at one time. They can have complicated legal structures and can carry out exceedingly complex business and large amounts of transactions on a daily basis. All these things make them difficult to interdict in their involvement or use in serious criminal enterprises. We must ensure that we allow law enforcement to target those businesses which are involved in serious crime with what is effectively a higher regulatory burden. This will enable them to be prevented from continual engagement with serious crime while, at the same time, keeping a light-touch regulatory burden in a particular sector for those organisations not so engaged. So, for example, where a business has been proven to be involved in serious crime, an order can require it to provide its accounts or other information to an authorised monitor to ensure that it complies with a requirement not to conduct its business in a particular way. This will be effective where the information concerned is particularly complex and where someone like a forensic accountant will be able to make a far better assessment of the way the business is conducting itself than law enforcement would be able to by itself. This effectively increases the regulatory burden on the business and brings with it an additional cost to that business. That is the cost of showing that it is acting in a way we would expect all businesses to act; that is, that it is not involved in serious crime. This cost is targeted, as advocated by Professor Macrory, through a risk-based approach, based on previous involvement in serious crime. Regulation does, of course, impose a cost on business, but we can all agree that this is better than the results of no regulation at all. Similarly here, there is the potential, where reasonable and proportionate, for there to be a burden on the business concerned, but this is to be preferred to the potential cost of having to regulate an entire sector. There is also a safeguard included in the amendments whereby the court will impose a requirement to pay the costs only where it considers it to be appropriate to do so. In coming to this decision, it will have to have regard, first, to the means of the body corporate, partnership or unincorporated association concerned; secondly, the expected size of the costs; and, thirdly, the effect of the terms on the ability of the body corporate, partnership or unincorporated association which is carrying on business to continue to do so. This provides a very strong steer to the courts to ensure that orders in relation to costs are used only where the overall effect on the business is not such as to cause damage to it as a continuing concern. We need to ensure that businesses are not being used by serious criminals while, at the same time, recognising the importance of ensuring that the business sector as a whole is not damaged by measures designed to combat the few. These amendments strike this balance. Finally, I know and understand that some noble Lords have expressed an interest as to how the cost process will work. As I said, we have included the safeguard to ensure that the court looks at certain factors such as the means of an organisation in deciding whether a provision is appropriate. We have included in the new clauses provision for the details of how costs will be assessed to be set out by order. I do not think it is necessary to have such detail in the Bill, but perhaps it will be useful to make a few points clear. First, the courts, in exercising their discretion as to whether to include provision for costs in an order, will act in a way that is reasonable and proportionate. We anticipate that costs will be assessed by the court on the basis that the expected costs of the authorised monitor which is employed. The court can provide that the organisation will have to pay some or all of the costs of the monitor. It will be open to the organisation to appeal against the inclusion of such a term in the order in the usual way. Finally, provision will then be made for an appeal against the quantum of the costs themselves through the order-making power in the new clause. Lastly, I apologise again for the lateness in introducing the amendment, but it is one which we believe can help to make a difference in a very specific and targeted way to the success of law enforcement’s fight against serious criminals. As a result, while I regret its lateness, we would have been remiss indeed not to bring forward the amendments in the way that we have. I trust that the House will feel able to accept them. Moved, That the House do agree with the Commons in their Amendment No. 32.—(Lord Bassam of Brighton.)