Serious Crime Bill [HL]

My Lords, I take the House’s admonitions very seriously. I listened very carefully to what the noble Baroness, Lady Hanham, said, to the full fury of the noble Lord, Lord Marlesford, and to the reasoned plea by the noble and learned Lord, Lord Lloyd, as well as to the outright opposition on the part of the noble Lord, Lord Thomas of Gresford, to the whole notion of including the clause in the Bill. I recognise that it is unusual, although not completely so, for our Government and other Governments to seek at late stages in the progress of a piece of legislation to include new measures or measures that add a new twist to an existing policy that is set out in the terms of that legislation. It is therefore not completely unusual. I do, however, accept the fundamental point made by the noble Baroness that it is generally highly undesirable to put into a Bill at a late stage something that has not had the opportunity that we usually afford government Bills, not only in your Lordships’ House but in another place, to be given very detailed and line-by-line scrutiny. I also heard the noble Baroness’s question about whether we would be willing to agree to some form of post-legislative scrutiny with the judiciary on this matter. In a sense, that was also the plea of the noble and learned Lord, Lord Lloyd, and part of the thinking behind the very sharp observations on the amendments made by the noble Lord, Lord Marlesford. My simple answer to the question is yes, we are more than happy to have post-legislative scrutiny on this particular set of amendments. It makes absolute sense. In any event, we are seeking to work very closely with the judiciary on this to ensure that the cost provisions in particular are not used in any way that could constitute a punitive sanction on legitimate businesses. The forensic way in which this piece of the picture—this part of the Bill—will be used demands that we do exactly that. I hear those admonitions. I recognise their seriousness and I am grateful to the noble Baroness in particular for committing the Opposition Benches to not supporting the Liberal Democrat amendment, which would remove our amendment from the Bill. I will happily ensure that we also invite noble Lords to make further post-legislative contributions to air and examine some of the detail that will be needed to thrash out how these amendments will operate in practice. I will now move on to some of the other questions and issues that are important in the context of these amendments. There is a generalised allegation, which is quite understandable, that paying for the costs of monitoring could put quite legitimate and serious businesses out of business. That is exactly what we want to avoid. We know that companies and other bodies can be used by serious criminals in a complex and considerable variety of ways. Some of these will mean that the business is little more than a front and some will simply be using the resources of a larger company. There are two imperatives here that we are trying very carefully to take into account: first, that we should be seeking to stop these businesses being used to further serious criminal ends, and, secondly, that, where possible, if a company is maintaining any legitimate business elements, these should be protected and maintained. In doing that, I could fairly argue that we are adopting McCrory principles, because the potential for authorised monitors balances these two imperatives very well. It means that we can put in place what is effectively a targeted higher form of regulation, where appropriate, which will help to ensure that future involvement in serious crime is prevented. Almost as importantly, the court will ensure that the impact of the costs of the monitor on the business is fully taken into account in deciding whether it is an appropriate term for an order. They will look at the means of the body corporate, partnership or unincorporated association concerned, as I explained earlier. They will look at the expected size of the costs and look very carefully at the effects of the terms on the ability of any body corporate, partnership or unincorporated association that is carrying on the business to continue to do so. It is also the case that these monitors will be useful where there is a great deal of complexity in the business concerned—where there are a very high number or particularly complex business transactions being conducted, for example. Businesses with such complex structures are almost certainly more likely to be able to bear the cost of the monitor than a smaller, less complex organisation. We should be confident that the costs are very unlikely to be so high as to put an organisation out of business. The noble Lord, Lord Thomas of Gresford, pointed out that businesses would be paying for criminal activity that has never been proved against them. But our argument is that that is not the case. What we are doing here is requiring an organisation that has been proven to be involved in serious crime to pay the cost of what is effectively akin to raising the regulatory burden on it. It is only right that we recognise that organisations can be used very effectively to provide a means for serious criminals to achieve things that would not otherwise be within their scope. For example, money laundering as a private individual is virtually impossible without some form of organisation, such as a suspect bureau de change, providing some form of facilitation. We can also argue that there is nothing new in asking businesses to prove that they are acting within acceptable norms in the way that they are carrying out their activities. Sometimes, that proof comes with a cost to the business, such as the cost of employing auditors for their accounts. Here, we are simply providing a means of targeting that approach against those organisations where the court has reasonable grounds to believe that future involvement in serious crime may be prevented, certainly restricted and most certainly disrupted. I should deal with one or two other questions. The noble Baroness, Lady Hanham, asked who the monitor will be, who will choose and what checks and balances there will be. A monitor will have to be an expert in the information that they receive. A good example would be an accountant or perhaps a logistics expert. It will be for law enforcement officers to advise who is best to undertake that work—some of it will need to be extremely forensic in its nature. What checks and balances will there be? That is an entirely proper question. The answer, very simply, is that, from time to time, there will have to be a return to the court for variation, validation and discharge. So the court will operate as a check and a balance in those cases. The noble Lord, Lord Thomas, asked a similar question and I think that my response probably covers his point about who will specify who the monitors are. I have covered the issue of costs and the allegation that they may be punitive. I do not believe that they will; they will be proportionate. The fact of the court acting as a check and a balance in the way that it will should ensure that the system operates fairly. I am very grateful to noble Lords for their contributions. I recognise the sincerity of the concerns raised and criticisms made. I commit to the Government to some form of post-legislative scrutiny on the government amendments. I accept that this is a less than perfect way to approach the matter. It would be inappropriate to withdraw our amendments at this stage, because this is the most appropriate piece of legislation for them to be a part of. They certainly fit within the serious crime prevention order remit and work well with the general fact of the legislation. It would be wrong for us not to provide those useful and necessary tools to law enforcement at a time when we are stepping up our efforts to disrupt high value crime and adopting this approach to disrupt serious criminals. I cannot give precise figures for the percentage of cases in which we may need an intervention of the type that we have been discussing, but in considering the impact of the legislation, officials estimated that there might be some 30 or so serious crime prevention orders a year. A majority of those will be against individuals; a smaller number will be against organisations. So we are considering a small number of orders in any event and an even smaller number in which this approach might be needed. That is right because we need to be very careful about how the powers apply and how the legislation works.