Proceeds of Crime Bill

Public Bill Committee, 13 November 2001.

Standing Committee B

Proceeds of Crime Bill

Bob Ainsworth (Labour, Coventry North East)

I beg to move,

That—

(1) during proceedings on the Proceeds of Crime Bill the Standing Committee do meet on Tuesdays at half-past Ten o'clock and at half-past Four o'clock and on Thursdays at five minutes to Nine o'clock and at half-past Two o'clock, except that on Tuesday 8th January 2002 the Committee shall not meet at half-past Ten o'clock;

(2) 39 sittings in all shall be allotted to the consideration of the Bill by the Committee;

(3) the proceedings to be taken on the sittings shall be as shown in the second column of the Table below and shall be taken in the order so shown;

(4) the proceedings which under paragraph (3) are to be taken on any sitting shall (so far as not previously concluded) be brought to a conclusion at the time specified in the third column of the Table;

(5) paragraph (3) does not prevent proceedings being taken (in the order shown in the second column of the Table) at any earlier sitting than that provided for under paragraph (3) if previous proceedings have already been concluded.

TABLE SittingProceedingsTime for conclusion of proceedings 1stClause 1, Schedule 1 and Clauses 2 to 5 — 2ndClause 1, Schedule 1 and Clauses 2 to 5 — 3rdClause 1, Schedule 1 and Clauses 2 to 5 — 4th Clause 1, Schedule 1 and Clauses 2 to 5 (so far as not previously concluded), New Clauses and New Schedules relating to Part I 5 p.m. 5th Clauses 6 to 40 — 6th Clauses 6 to 40 — 7th Clauses 6 to 40 — 8th Clauses 6 to 40 — 9th Clauses 6 to 40 — 10th Clauses 6 to 40 (so far as not previously concluded) 7 p.m. 11th Clauses 41 to 74 — 12th Clauses 41 to 74 (so far as not previously concluded) 5 p.m. 13th Clauses 75 to 93 — 14th Clauses 75 to 93 (so far as not previously concluded), New Clauses and New Schedules relating to Part 2 7 p.m. 15th Clauses 94 to 137, Schedule 2 and Clauses 138 to 157 — 16th Clauses 94 to 137, Schedule 2 and Clauses 138 to 157 (so far as not previously concluded), New Clauses and New Schedules relating to Part 3 5 p.m. 17th Part 4, New Clauses and New Schedules relating to Part 4 1 p.m. 18th Clauses 245 to 252, Schedule 3, Clauses 253 to 268, Schedule 4 and Clauses 269 to 287 — 19th Clauses 245 to 252, Schedule 3, Clauses 253 to 268, Schedule 4 and Clauses 269 to 287 — 20th Clauses 245 to 252, Schedule 3, Clauses 253 to 268, Schedule 4 and Clauses 269 to 287 — 21st Clauses 245 to 252, Schedule 3, Clauses 253 to 268, Schedule 4 and Clauses 269 to 287 — 22nd Clauses 245 to 252, Schedule 3, Clauses 253 to 268, Schedule 4 and Clauses 269 to 287 (so far as not previously concluded) 7 p.m. 23rd Clauses 288 to 310 — 24th Clauses 288 to 310 — 25th Clauses 288 to 310 (so far as not previously concluded), New Clauses and New Schedules relating to Part 5 5 p.m. 26th Clauses 311 to 319, Schedule 5 and Clause 320 — 27th Clauses 311 to 319, Schedule 5 and Clause 320 (so far as not previously concluded), New Clauses and New Schedules relating to Part 6 7 p.m. 28th Clauses 321 to 324, Schedule 6 and Clauses 325 to 329 — 29th Clauses 321 to 324, Schedule 6 and Clauses 325 to 329 — 30th Clauses 321 to 324, Schedule 6 and Clauses 325 to 329 — 31st Clauses 321 to 324, Schedule 6 and Clauses 325 to 329 (so far as not previously concluded), New Clauses and New Schedules relating to Part 7 7 p.m. 32nd Part 8 — 33rd Part 8 — 34th Part 8 (so far as not previously concluded), New Clauses and New Schedules relating to Part 8 1 p.m. 35th Part 9, New Clauses and New Schedules relating to Part 9 7 p.m. 36th Part 10 — 37th Part 10 (so far as not previously concluded), New Clauses and New Schedules relating to Part 10 5 p.m. 38th Part 11, New Clauses and New Schedules relating to Part 11 1 p.m. 39th Clause 433, Schedule 7, Clauses 434 to 438, Schedule 8, Clause 439, Schedule 9 and Clauses 440 to 444, remaining New Clauses and New Schedules 7 p.m.

Dominic Grieve (Conservative, Beaconsfield)

I take this opportunity to welcome you to the Chair, Mr. McWilliam. The programme motion was agreed with little difficulty and we hope that it will serve the Committee well. I wish first to flag up the fact that at least one member of the Committee has expressed slight concern that the 8.55 am start for our proceedings on Thursday mornings may cause difficulty because of his arrangements for travelling into London. I shall not say anything more about that now, because in the past we have succeeded in resolving such matters amicably. However, if we make progress, and such timing of our proceedings is causing difficulty to a member of the Committee, perhaps we could reconsider the start time and move it back, even if only by 20 minutes, to 9.15 am. I thank the Minister and the other members of the Programming Sub-Committee who have made good progress in sorting out such matters.

John McWilliam (Labour, Blaydon)

The fact that our proceedings are to start at 8.55 am is the result of a motion that was carried in the House. If there were a desire on the part of a member of the Committee to change the time, the Programming Sub-Committee would need to meet again.

David Wilshire (Conservative, Spelthorne)

May I, too, welcome you to the Chair, Mr. McWilliam. As I am part of the usual channels, I apologise for not attending the meeting of the Programming Sub-Committee. I was at my mother's funeral, and I am sure that you understand where my priority lay. If there is a need to discuss the timing of our proceedings, I am sure that that will be done in the usual way.

Question put and agreed to.

John McWilliam (Labour, Blaydon)

I remind the Committee that copies of the money resolution and the Ways and Means resolution associated with the Bill are available in the Room. Adequate notice must be given of amendments. It is not my habit, nor that of my co-Chairmen, to call starred amendments—and they do not become unstarred in the afternoon, as happened in the past. Clause 1 The Agency and its Director

Clause 1 - The Agency and its Director

Dominic Grieve (Conservative, Beaconsfield)

I beg to move amendment No. 1, in page 1, line 7, after `Director)', insert

`and a deputy Director for Northern Ireland'.

John McWilliam (Labour, Blaydon)

With this it will be convenient to take amendment No. 6, in schedule 1, page 256, line 23, leave out `senior official' and insert `deputy director'.

Dominic Grieve (Conservative, Beaconsfield)

I can tell the Minister that we intend, in so far as we can, to scrutinise such a massive piece of legislation in a reasonable time, and to be as concise as possible when discussing amendments. As the Bill is so substantial, it will require close scrutiny and we shall focus on the aspects of it that cause us anxiety. Its first five clauses are some of the least controversial and we shall therefore endeavour to get through that part of the Bill as soon as possible, because later clauses are much more controversial.

Amendments Nos. 1 and 6 relate to the position of the agency and its director. Yesterday we received a helpful document from the Home Office that detailed, as had not been done previously, how it was expected that the director would carry out his functions. That has undoubtedly been extremely useful in preparing for this morning's debate, but it raises several questions that need to be answered.

Amendment No. 1 is about the director's role in relation to Northern Ireland. This may seem an obvious place to start, but clearly the director's functions are considerable. He will have considerable discretion and power, and his remit extends to England, Wales and Northern Ireland.

The Bill makes provision for the appointment of a deputy director, but no specific reference is made to anyone, apart from an official, having responsibility for Northern Ireland. However, as the Minister knows, Northern Ireland has a separate judicial system, with its own chief justice and judges, which it may even be hoped may become part of the devolved responsibilities of the Northern Ireland Assembly at some point. I am therefore bound to flag up the fact that I am slightly surprised that Northern Ireland is not given the separate status of having a deputy director, especially as the director's powers are so considerable.

This is a matter of accountability. As the director has delegated functions, and as in Northern Ireland those functions will presumably be exercised wholly by the official nominated, failing to give him the status of deputy director seems to us to be a mistake. Doing so would emphasise his distinctive role. As the Minister makes clear in the documents that he sent us yesterday, the official will have to operate in the closest possible liaison with the law enforcement authorities in Northern Ireland, which effectively have a separate structure. A separate deputy directorship should be set up, while allowing a single Assets Recovery Agency to function. That is a simple but important point, and we commend the amendments to the Committee.

Bob Ainsworth (Labour, Coventry North East)

Amendment No. 1 would require the Secretary of State to appoint a deputy director of the agency for Northern Ireland. Amendment No. 6 would require the appointment of a deputy director for Northern Ireland rather than, as is currently proposed, a senior official, but it would not require that appointment to be made by the Secretary of State.

The Government are committed to combating crime in Northern Ireland and to ensuring that the agency operates effectively there. The possibility of a separate agency for Northern Ireland was considered with colleagues from Northern Ireland before the Bill was introduced. It was agreed that there should instead be a single agency with a unified management structure, and that is reflected in the Bill.

It may be helpful if I explain how we envisage the agency being structured in Northern Ireland. We envisage that it will have a presence—an office and operational staff—in Northern Ireland, which can be achieved administratively. A senior official in the agency will have the specific responsibility of exercising the director's functions in Northern Ireland. Schedule 1 states that the director will appoint that official, and will also be required to make specific references to Northern Ireland in his annual plan. The Secretary of State must approve the annual plan as a whole. We envisage that the Home Secretary will take the lead on that, but approval will not be given without consultation with the Secretary of State for Northern Ireland. We also envisage that the director will keep both the Home Secretary and the Secretary of State for Northern Ireland informed of the plan's progress. Although the Home Secretary will be accountable to Parliament for the agency, we expect that the Secretary of State for Northern Ireland will give answers relating to Northern Ireland.

That is the background against which we should consider the amendments, which raise two questions. First, should the agency have an official with the title of deputy director for Northern Ireland? If the answer to that is yes, the second question is whether any such deputy director should be appointed by the Secretary of State rather than by the director.

The Bill requires that the agency's staff must include a senior official with specific responsibility for exercising his functions in Northern Ireland. That is set out in paragraph 4 of schedule 1. The director will make that appointment, just as the director will appoint his deputy. Do we need the official appointed to the Northern Ireland office to be termed a deputy director rather than a senior official?

It is important that the agency's work in Northern Ireland is given the high profile and the priority that are necessary. However, it is not appropriate to specify that there should be two deputy directors of the agency. The deputy to the director, for whom provision is made in paragraph 4(a), will—following the normal use of the term ``deputy''—act as a substitute for the director in his whole range of functions when called upon to do so. The role of the officer with responsibility for Northern Ireland will be far narrower. The term deputy director should not be used, because that could cause confusion.

Dominic Grieve (Conservative, Beaconsfield)

Obviously, we have not explored the national structure of the agency—the Minister touched only briefly on that. However, he laid down a broad hint that there will be an office in Northern Ireland for Northern Ireland, and I suspect that there will be one office in England and Wales for England and Wales. Does not the geographical separation of the two offices emphasise the need for a deputy director with enhanced status, because of the different judicial system under which he would operate?

Bob Ainsworth (Labour, Coventry North East)

As I said, it is our intention to have a separate office with a specific official appointed to run it. The title that we give to that official is not set in stone. I am happy to reflect on how we give appropriate recognition to that role and to the priority of the work that must be done in Northern Ireland. However, I must tell the hon. Gentleman that deputy director is not the appropriate title. Perhaps we should reflect on whether there should be a named senior official, or perhaps an assistant director, for Northern Ireland. The title should be appropriate and should send out the right messages. The amendment to make the title ``deputy director'' could lead to confusion and make people believe that that role influences matters beyond Northern Ireland, which is wider than expected. I will consider the matter, and will, before Report stage, reflect on the hon. Gentleman's point that the senior official's title should reflect the priority given to work done in Northern Ireland.

The hon. Gentleman asks whether the Secretary of State, rather than the director, should appoint the Northern Ireland official, whatever his or her title. That arrangement would not be the best way to achieve the management accountability necessary for the agency. If the official for Northern Ireland were appointed by the Secretary of State, he or she would be the only member of the agency's staff not appointed by the director. That might create confusion as to whether the Northern Ireland official is accountable to the director or to the Secretary of State.

The official will exercise the director's functions in Northern Ireland, and will receive his or her powers from the director. It makes sense for the director to make the appointment in order to preserve the unity of the agency's management structure. The director will retain overall control of his functions in Northern Ireland. Ministers will be involved in the appointment process, and the director will have to consult the Secretary of State for Northern Ireland when making the appointment. We reject amendment No. 1, because the title

``deputy Director for Northern Ireland''

could be confusing. We reject amendment No. 6 because it would make management accountability in the agency difficult. For those reasons, I ask the hon. Gentleman to withdraw the amendment.

Dominic Grieve (Conservative, Beaconsfield)

I am grateful to the Minister for his explanation. I was interested to hear of the consultation that he says will take place with the Secretary of State for Northern Ireland on the subject of the appointment. Such a consultation would help to address the anxieties that led me to table amendments Nos. 1 and 6. The question, as always, is what we should put in the Bill and what we should leave out. The Minister says that the consultation will be held, but there is nothing in the Bill to specify that the consultation must take place, and must involve those Ministers. We may have to revisit that issue.

The notion of a consultation gives me some reassurance, but as the Minister knows, if any area in the United Kingdom needs reinforcement against racketeering, it is Northern Ireland. Success in Northern Ireland is likely to be the benchmark that tells us whether the Bill works adequately. We must ensure, as a priority, that the Northern Ireland official is seen to have sufficient status, and that the consultation mechanisms work. Subject to that, and subject to the Minister's promise to think of ways in which to emphasise the Northern Ireland official's role, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Dominic Grieve (Conservative, Beaconsfield)

We must consider the role of the director, and his or her functions. The extent to which the director is an independent law enforcement officer or an officer who does the bidding of the Home Secretary is ambiguous. I flag that up, because the point is important.

The Director of Public Prosecutions, for example, has complete independence. The Attorney-General cannot interfere with the exercise of his discretion, and nobody would suggest that that should be the case. However, a hybrid product is being created, and I am concerned about that, as the explanation provided is unclear. Will the director be left to get on with the job, with the exercise of his or her discretion ring-fenced from any influence from others, or will the director merely play an executive role by carrying out the will of the Government in respect of the proceeds of crime, confiscation and civil recovery? The document that the Minister provided suggested that the director would not have as much autonomy as the DPP. The Committee will return to that matter as it discusses the legislation further, but I want to flag up the fact that I wish the Minister to clarify the role that the Home Secretary will play in exercising influence over the actions of the director.

David Wilshire (Conservative, Spelthorne)

I agree with everything that my hon. Friend has said.

I wish the Minister to keep in mind a different matter, which might become serious—although at the moment it may seem petty and silly. Subsection (5) states:

``Anything which the Director is authorised or required to do may be done by—

(a) a member of staff of the Agency, or

(b) a person providing services under arrangements made by the Director''.

The director is entitled to appoint people all the way down through the system—to the office cleaners, for example—and he is entitled to arrange services, such as those provided by the outside contractors who do the catering for his staff. I am sure that the Government do not intend to allow such people to deal with some of the highly sensitive matters that the Bill addresses. Is the Minister prepared to register that point, and if Members from my party choose to revisit it, will he clarify the fact that certain services or activities should be handled only by senior people? It might be necessary to ask for changes to be made.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

I seek clarification from the Minister about the way in which the Assets Recovery Agency will co-operate with the Scottish authorities. I am unclear about how it will be guaranteed that there are no gaps between the Scottish jurisdiction and the ARA. It is essential that hordes of English villains—there are millions of them—cannot flee north of the border to a jurisdiction where the ARA cannot follow them. Will the Minister describe the liaison arrangements, and will he address the issue of the funding that will be provided to the ARA and the appropriate authorities in Scotland? I especially want him to clarify what funding has been set aside for Scotland to create or enhance the asset recovery unit and the civil recovery units at the Crown Office.

Mark Field (Conservative, Cities of London and Westminster)

I endorse the comments of my hon. Friend the Member for Beaconsfield (Mr. Grieve). I also wish to register my concern regarding the qualifications of the person who is appointed as director. The Bill is lengthy, and it will arouse worries about the agency's powers among many people who work in the City of London. The recent events involving Railtrack have revealed that the Secretary of State for Transport, Local Government and the Regions does not fully understand the practices of the City of London. Apparently, it takes seven or eight days to prepare a 71-page document—but I have spent most of my career in the City of London, and anyone who has worked there knows that a 71-page document can be turned around within a matter of hours, especially when one is dealing with the global financial world.

I do not expect clause 1 to contain a determination of what professional qualifications the director should have, but we must ensure that that person has credibility with regard to the financial markets, and an understanding of current practices in the City of London. Given the real and extensive regulatory burdens on financial institutions, law firms and accountants, we need someone who will have credibility and an understanding of current day-to-day practices in the City of London. My concern mirrors concerns that the Opposition have expressed about other regulators, and it is all the more important to ensure that someone of genuine calibre and weight is appointed to this position. What thoughts does the Minister have about the absolute minimum professional qualifications that would be expected of someone who took on such a role?

Bob Ainsworth (Labour, Coventry North East)

I appreciate the comments of the hon. Member for Beaconsfield. As we progress through the Bill, we shall consider the issues that he raised in more detail.

I have a dilemma on this subject, because the hon. Member for Beaconsfield is worried that the director will be subject to political control and will not have a free hand, while the hon. Member for Spelthorne (Mr. Wilshire) questions whether the director should have a totally free hand in relation to those whom he appoints. We are trying to achieve total operational freedom for the director in pursuing cases, and it would be wholly wrong if the Home Secretary had the capacity to interfere in that process. The director is not a law enforcement agency but a person who is appointed to pursue the proceeds of crime. Important differences therefore exist between this agency and a law enforcement agency.

Mr. Wilshire rose—

John McWilliam (Labour, Blaydon)

Order. Before the hon. Gentleman speaks, I remind the Committee that although hon. Gentlemen may remove their jackets, they should ask permission before doing so. Hon. Ladies do not need to ask.

David Wilshire (Conservative, Spelthorne)

On my own behalf, and on behalf of one or two of my colleagues, I grovel, Mr. McWilliam. I consider myself told off; I shall leave my colleagues to say how they consider themselves in due course.

I cannot have been making myself clear, as the Minister appears to think that I was saying that there should be a restriction as to whom the director appoints. I was not saying that. I suspect that some people will be appointed or engaged to provide services who should not have the powers that the independent director will have. I do not want to limit what the director does, only how far down the line such powers extend.

Bob Ainsworth (Labour, Coventry North East)

I am glad to have that clarification. The hon. Gentleman is making many of the same points made by the hon. Member for Cities of London and Westminster (Mr. Field) about the appropriateness of the chosen director and his credibility with various institutions, and about the staff. Clearly, it is important to have an appropriate person who has the capacity to command respect, and the skill and ability to run the agency. The people appointed will be drawn in from many areas. In the early days of the agency, it will be necessary to second people from other agencies to provide those skills. Over a period of time, a core of capacity will be built up within the agency, and, I hope, a high degree of credibility, which will enable it to do exactly what we ask of it.

I can tell my hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) that there have been discussions with the Scottish Executive about the moneys that will need to be made available for the functions that will not be carried out directly by the agency in Scotland. There is not too much room for disagreement on that, and as we progress, I shall try to make sure that he is made aware of exactly what those arrangements are. The agency has the power for taxation in relation to its role under part 6 in Scotland, and an appropriate interface is necessary. I hope that my hon. Friend will find that the note that I have passed around will explain how that interface will operate with regard to how and when the director uses his powers under part 6—

John McWilliam (Labour, Blaydon)

Order. The hon. Gentleman should address the Chair.

Bob Ainsworth (Labour, Coventry North East)

Sorry, Mr. McWilliam.

I hope that that explains how and when the director will use his powers under part 6, and how he will make sure that there is a proper interface with the Scottish authorities before he does so. The Bill also includes provision for enforcements made in England to be enacted in Scotland and vice versa. It will therefore be possible for the many millions of rogues of English extraction to be chased into Scotland and properly pursued if appropriate, and the reverse will also be possible. I am sure that my hon. Friend will be comforted by that thought.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Schedule 1 - Assets Recovery Agency

Nick Hawkins (Conservative, Surrey Heath)

I beg to move amendment No. 7, in page 257, line 27, leave out from `targets' to end of line 28 and insert

`and the basis of such performance targets;'.

I join the other hon. Members who have welcomed your chairmanship of our proceedings, Mr. McWilliam. The Opposition feel that there is a need to amend paragraph 8(3)(b), on page 257, because we are concerned about the way in which performance targets are used, and what performance targets there should be. We have bitter experience of the way in which the Government have used—or, as we would say, misused—performance targets. That relates to some of the concerns expressed in the previous debate by my hon. Friend the Member for Cities of London and Westminster. Like him, I worked for several years in the City of London and in business generally before coming into this House in 1992, and I have stayed in close touch with the business world during my nine and a half years in the House. Anybody who has experience of business, at whatever level, knows that any sensible business might have three, four, five or six performance targets that the senior management would be asked to pursue. It is crazy for any organisation to be given 58 performance targets.

Labour Members, especially those who are new to this House, may wonder why I chose that number. There is a very good reason: 58 is precisely the number of performance targets that the previous Home Secretary gave chief constables and police authorities. The chief constable in Surrey said to me, ``This is crazy. No sensible organisation should have 58 performance targets.'' Chief constables all over the country said the same thing to the previous Home Secretary a year or so ago. To be fair to him, I must add that the previous Home Secretary, who is now Foreign Secretary, responded. He agreed to reduce the number of performance targets. However, instead of reducing them to a sensible number—three, four, five or six—he reduced them from 58 to 43. As the chief constables would say, that was a distinction without a real difference. It was still nonsense.

In no way can any sensible organisation respond to 43 performance targets. History is going to repeat itself—and, as everyone knows, it repeats itself first as tragedy and then as farce. There should be a control in the schedule to ensure that there are not too many performance targets. What is the basis of them all? Parliament should have some opportunity to scrutinise them. When the Minister responds to my remarks in his usual dignified way, he will no doubt say, ``Of course it will all be dealt with sensibly, and everything will be motherhood and apple pie.'' However, we are suspicious, and we have good recent reason to be. We need to know a great deal more about what the Government are providing, because one of our worries, to which we shall return repeatedly, is that the Bill gives wide powers and discretion. One problem is that much of what it does throughout its 444 clauses and its schedules is to provide for powers that we shall come to know about later.

My hon. Friend the Member for Beaconsfield rightly thanked the Minister for providing us with some guidance, albeit at a late stage—although we had sight of it before our sitting started, which was helpful. However, we want more safeguards written into the Bill. Conservative Members are always suspicious about Home Secretaries or directors being given draconian powers that Parliament will not have the right to scrutinise, and which may appear later in the form of guidance, much of which will be administrative and will not require a debate in the House, not even on a statutory instrument. It is true that some aspects of the Bill will give the Home Secretary the power to introduce further measures in the House under statutory instrument procedure, but by no means all of them will do that.

John McWilliam (Labour, Blaydon)

Order. I have listened carefully to the hon. Gentleman, and I have given him a lot of latitude—but the amendment would not result in the measures for which he is arguing.

Nick Hawkins (Conservative, Surrey Heath)

As always, I am grateful for your guidance, Mr. McWilliam. I shall return to the specific terms of the amendment, but we should all flag up some of our general concerns in the early stages of the Committee, after which we shall restrict ourselves more tightly to the Bill.

John McWilliam (Labour, Blaydon)

Order. I am bound by Standing Order, and unfortunately, I cannot follow the hon. Gentleman down the seductive road along down which he is trying to lead me. I reiterate the fact that the amendment would not result in the measures for which he is arguing.

Nick Hawkins (Conservative, Surrey Heath)

I am trying to explain our concern that there should be an explanation about the basis of the performance targets. The amendment would bring that about. However, I shall stick to your guidance, Mr. McWilliam. I am sure that the Minister will reassure us, but we are worried about such matters and we shall stress our concern whenever the wording in the Bill is too wide. We shall be interested in whether the hon. Gentleman can give us some comfort for the future and say that he is willing for the Bill to be more specific. If the Government cannot accept our amendment today, we hope that further consideration will lead to their reflecting on the matter and agreeing that we are right. The amendment may be accepted in another place or on Third Reading. We shall return to the issue.

Norman Baker (Liberal Democrat, Lewes)

I welcome you to the Chair, Mr. McWilliam, on behalf of my Liberal Democrat colleagues. I wish to propose a radical way forward. Given that the Bill is so exhaustive and detailed, I want members of the Committee to spend the limited time that we have on matters of substance rather than on amendments that would not take us very far forward. We should not feel obliged to table amendments to clauses or schedules if none are required. We should restrain ourselves, and use our time as best we can by concentrating on issues of real substance that relate to the Bill. I hope that we shall adopt such an approach this morning, and in subsequent sittings.

Bob Ainsworth (Labour, Coventry North East)

I accept what the hon. Member for Surrey Heath (Mr. Hawkins) said about the number of targets and potential difficulties. However, he should reflect on the fact that the Government whom he supported presided over a doubling of criminal activities. Perhaps things might have been different if they had had a few targets.

The amendment would require the director to include the basis for any performance targets in his annual plan, which may or may not be for the financial year covered by the annual plan as well as the targets themselves. The value to organisations of an annual plan is increasingly recognised. It is common practice, when new bodies such as the Assets Recovery Agency are established, for legislation to include provisions for drawing up annual plans. It is accepted that organisations should have performance targets as part of the plan, some of which are likely to be related to the key objectives of the organisation. Other targets may be related to the performance of ancillary tasks, such as dealing with correspondence.

The performance targets in the Assets Recovery Agency's annual plan will be set by the director, but must be approved by the Secretary of State. The targets will have to take into account the wider work of the assets recovery committee, including successive assets recovery strategies. We may expect the inclusion of a target that relates to the number of criminal confiscation hearings that are conducted and the number of civil recovery actions that are brought. Initially, we anticipate that in any full year the agency might have a caseload of 15 to 20 civil recovery cases, 250 criminal confiscation cases, for which the agency is responsible, and 25 to 30 tax cases. However, the number and spread of cases may vary from those figures.

Performance targets set in annual plans are usually challenging but achievable. The Secretary of State will bear that in mind when approving the director's annual plan. However, the director should not be required to set out the basis for the performance targets in his plan. The director may include it if he wishes, but there is no reason why he should be required to. The Secretary of State must approve the plan. If he is not satisfied with the targets or requires further information about their basis, he can request further information from the director.

Dominic Grieve (Conservative, Beaconsfield)

Is there not a potential problem? We want such an organisation to be proactive, and, as far as is possible, to seek to recover assets. However, if targets are fixed on the basis of sums of money recovered, there is a risk that that will be the first step on the path to injustice. A burden would be placed on the director to seize assets when that might not be justifiable.

Bob Ainsworth (Labour, Coventry North East)

I understand the hon. Gentleman's worries. On Second Reading he mentioned the Child Support Agency's problems . I ask him to accept that the agency will be a different animal, and will operate in a different field. It will not have nearly as wide a remit as the CSA. To be frank, there are no easy targets. Legislation that supposedly allows us to confiscate the proceeds of crime has existed for some time, and it was passed by Governments that the hon. Gentleman supported. That legislation has not been effective, and it is widely recognised that there is a need to settle the matter.

The agency will not deal with thousands upon thousands of cases submitted by the general public. Overwhelmingly, it will deal with the cases that the law enforcement agencies refer to it. Such cases will be few and none will be easy. The guidance to the director is designed to ensure both that everybody is satisfied with the relevant hierarchy of powers for law enforcement agencies and powers for this agency, and that recovering the proceeds of crime does not have a higher priority than the prosecution of criminal cases. The annual plan should give us the opportunity to make the agency accountable not only to the Secretary of State but to Parliament, because the plan will be lodged in Parliament for everyone to see.

Steve McCabe (Labour, Birmingham, Hall Green)

We should set aside the interests of those who, at this early stage, are laying the ground for a political assault on the agency. I am concerned because paragraph 8(3)(b) states that performance targets need not be consistent with the objectives set by the director in the annual plan. That raises a query: what kind of circumstances could produce considerable variance between the director's objectives in the annual plan, and the performance targets? If such a variance occurred regularly, would not it require some explanation?

Bob Ainsworth (Labour, Coventry North East)

I hope that there will be no variance between performance targets and the director's objectives, but some performance targets will have a wider scope and will be relevant to more than just the agency. The agency will form only a small part of the assets recovery strategy. It will not pursue the overwhelming majority of compensation cases that occur; most cases will be taken up by prosecuting authorities, and the agency will become involved with such cases only when those authorities want its involvement.

The annual plan will provide a mechanism that annually oversees the agency's actions, and that plan will provide for input from the Secretary of State. It will be placed before Parliament so that we can see the targets that the Secretary of State sets for the agency. With regard to concerns that the agency may set easy targets, I do not believe that the agency could get the courts' approval unless it convinced them that the threshold set by the targets was high enough to allow it to investigate and confiscate the proceeds of crime.

Nick Hawkins (Conservative, Surrey Heath)

The Minister will have received advice from his officials, no doubt, so is he prepared to tell us the number of performance targets that a director might be given in an annual plan? Will he give a formal assurance now, so that it is recorded in Hansard, that the director will be set no more than 10 performance targets? The Home Secretary could then set that figure before Parliament. That would allay many of our concerns.

Bob Ainsworth (Labour, Coventry North East)

No, I do not want to give a set number of performance targets. I can reassure the hon. Gentleman that I will state how we shall set the targets—both those that will be the agency's direct responsibility, and those that will have a far wider reach—before we discuss the relevant passages of the Bill. I laid that out in the note that I provided for the Committee. It gives our current thinking on the subject, but we do not want to pre-empt the agency before it is set up or has appointed its director.

Dominic Grieve (Conservative, Beaconsfield)

I am grateful to the Minister for allowing us to discuss this subject. Opposition Members have not got the slightest idea—

George Foulkes (Labour/Co-operative, Carrick, Cumnock and Doon Valley)

Hear, hear.

Dominic Grieve (Conservative, Beaconsfield)

We have not the slightest idea what sums the Minister thinks the agency can recover. It is all very well to set up such a structure, but there are similarities with the Child Support Agency. Some of those similarities are shared with the subject of drug recovery. I used to practise law on the subject of drug trafficking offences, and the amounts ordered to be seized were consistently larger than the amounts eventually seized. That is an important issue.

The Minister must enlighten the Committee as to how the agency will work in practice. How many millions of pounds per annum should the director try to seize? The Minister has the intelligence to answer—[Interruption.] At least, I think he does. I do not have the intelligence to do so—

George Foulkes (Labour/Co-operative, Carrick, Cumnock and Doon Valley)

In every sense of the word.

Dominic Grieve (Conservative, Beaconsfield)

Not in every sense of the word. We need guidance from the Minister.

John McWilliam (Labour, Blaydon)

Order. Sedentary interventions are unwelcome—however much the Minister of State, Scotland Office and I may have indulged in them in our previous incarnations.

Bob Ainsworth (Labour, Coventry North East)

There has been no attempt to hide the information on the basis of which the policy has been developed. The hon. Member for Beaconsfield has had an opportunity to read the performance and innovation unit's report: it shows international comparisons with regard to potential capability, and the failure of past performance is apparent.

I suspect that the hon. Gentleman and I will disagree about the reasons why confiscation orders were not enforced as often as they should have been, and the extent to which the agency will be able to fill the gap by ensuring that confiscation takes place more frequently. I have not attempted to hide the basis on which the Government have taken their decisions and chosen which road to go down, and I will try to ensure that the Committee is informed about our thinking on such matters as it reaches the relevant stages of the Bill.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

I support the thrust of the amendment, especially with regard to one subject. Certain aspects of the ARA's remit will extend to Scotland as well as to England and Wales, and in such circumstances, a single set of targets will cover the entire United Kingdom. However, in England and Wales the director of the ARA will pursue objectives that in Scotland are handled by other organisations. Will those Scottish organisations also be obliged to produce annual plans, objectives and targets? If so, they might be worded in a slightly different way, because of the different jurisdictions, and it would be helpful to ensure that they were compatible. That could only be ensured if the basis of such performance targets were listed. Therefore, I want the Minister to confirm three matters: first, that equivalent objectives and targets will have to be produced for Scotland; secondly, that they will, as far as possible, be compatible; and thirdly, that if that is not entirely the case, the basis of such performance targets in England and Wales, and in Scotland, will be made publicly available, to allow comparisons.

Mr. Ainsworth rose—

Nick Hawkins (Conservative, Surrey Heath)

I am not sure whether the Minister wishes to respond to that—but he has already spoken, so it would be unconventional for him to respond to his hon. Friend's speech. It might be more appropriate if the hon. Gentleman were to ask him a question. Although the procedure is unconventional, Opposition members would be happy for the Minister to respond.

John McWilliam (Labour, Blaydon)

Members of the Committee can speak as often as they wish.

Bob Ainsworth (Labour, Coventry North East)

I confess to my hon. Friend that I am not au fait with the details of how, north of the border, the Lord Advocate or Ministers make themselves accountable for performance targets. However, it will be necessary to ensure that the Act is correctly operated in every part of the United Kingdom, and I will try to come up swiftly with satisfactory answers to his questions.

Nick Hawkins (Conservative, Surrey Heath)

The Minister is doing his best to help Opposition members—as I knew he would. He realises that the Committee is discussing a serious matter, which has not been raised for frivolous reasons.

I am also grateful to the hon. Member for Glasgow, Pollok for supporting the spirit of the amendment. He and I play on the wings for the Lords and Commons rugby club, and we also frequently take a similar approach to issues such as that which the Committee is now discussing. I look forward to further co-operation between those on the Opposition Front Bench and those on the Labour Back Benches as the Committee proceeds. The hon. Member for Glasgow, Pollok always takes an independent view of such matters. He does not slavishly follow his Front Bench but always speaks for himself. That is one of the reasons why he is so widely respected in the House.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

I remind the hon. Gentleman that when we both played on Saturday, I scored a try in each half. On the one occasion in the past when I was minded to give him a scoring pass, he dropped it.

Nick Hawkins (Conservative, Surrey Heath)

I certainly remember the hon. Gentleman's two tries. He failed to inform the Committee that he managed the unique experience of scoring a try for each side, switching his jersey and playing one half for one side and the other half for the other. I would not dream of suggesting that the switching of jerseys is replicated in the hon. Gentleman's political career—but the word ``turncoat'' was mentioned by the Liberal Democrat peer who captained our team for the day. While playing for the Lords and Commons we have both dropped a multitude of scoring passes, and I do not believe that the experience to which the hon. Gentleman refers is unique.

We are discussing serious matters. Opposition Members are prepared to accept the Minister's kind offer to provide the Committee with guidance, and I am sure that he will write not only to us but to all members of the Committee. When we have seen that guidance, we may want to return to the point later, either on Report or in another place. For the moment, however, in light of the Minister's helpful offer, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

John McWilliam (Labour, Blaydon)

Before we discuss the next amendment, I give some guidance to the many hon. Members for whom this is the first major Standing Committee in this Parliament. We must speak to the amendments or clauses that are before the Committee. Matters that go wider than that are, strictly speaking, out of order. I have been lenient this morning, but do not be led into bad habits by the Front Benchers, who, by their very nature, have bad habits. Clause 2 Director's functions: general

Clause 2 - Director's functions: general

Dominic Grieve (Conservative, Beaconsfield)

I beg to move amendment No. 2, in page 2, line 19, leave out subsection (5).

The clause will allow us to have a wide-ranging discussion, because it relates to an important issue in the Bill. We have already touched on it in discussing clause 1 stand part. The amendment raises a specific issue about the guidance given to the director by the Secretary of State.

When we debated the matter on Second Reading, we had little sign of what form the guidance would take. However, as I said earlier, the Minister helpfully produced a guidance document, which arrived on our desks yesterday or the day before. It sets out the proposed guidance that the Secretary of State will give the director on how to exercise his functions so as best to contribute to the reduction of crime. Some aspects are innocuous and sensible. I am pleased that the guidance refers specifically to the director's need to liaise with prosecution authorities to ensure that no prosecution will be jeopardised by his activities, which is the nub of the matter.

Perhaps more controversial, especially in view of later clauses that deal with the triggers for confiscation, is point 5, which states:

``Where a criminal conviction has been obtained, the Secretary of State considers that the use of criminal confiscation is a method of targeting the proceeds of crime which will best contribute to the reduction of crime.''

No attempt is made to identify whether, for instance, the sort of crime referred to is crime for gain or any old crime. On the basis of the guidance note, if you had a road traffic conviction for speeding, you would bring yourself within the ambit of the Secretary of State's guidance. Some important issues arise from that.

John McWilliam (Labour, Blaydon)

Order. When the hon. Gentleman uses the word ``you'', he refers to the Chair, and I assure him that I do not have a conviction for speeding.

Dominic Grieve (Conservative, Beaconsfield)

I am sorry, Mr. McWilliam. I was oblivious to the fact that I had said ``you''. I was not suggesting that you had a conviction for speeding or for anything else.

We are discussing a guidance note, but there is nothing to prevent the Secretary of State from issuing dozens of guidance notes subsequent to the Bill being enacted. How does the Minister view that? Is what we were handed by the Government prior to this debate a tablet of stone or holy writ? Is it the defining guidance document for the director, after which he will be told to get on with it, or is it the first of dozens of guidance notes that the Home Secretary will send winging to the director's desk as he seeks to meet the performance targets that we discussed under earlier amendments?

If the guidance note is a tablet of stone, why was it not included in the Bill as a substantive clause? If it is not, how does the Minister see future guidance being developed? Above all, what opportunity will the House have to debate such guidance? The Bill sets out clearly what the director should do. He is supposed to hunt for the proceeds of crime by confiscation or civil recovery. That is an onerous task and one that is clearly a quasi-prosecutor's role. I was a little alarmed when the Minister drew a distinction between a prosecutor and the director of the Assets Recovery Agency because, for civil recovery, the powers given to the agency are draconian in the extreme compared with what has existed before.

As we said on Second Reading, the Government are setting up a structure that can lead people to be drawn through machinery that will ultimately confiscate their assets under a civil standard of proof. I am not even sure that it is a civil standard of proof; it seems to be a method based on the balance of probabilities. We must consider carefully what we are doing and what guidance will be given. I hope that the Minister can respond fully to my argument because the issue is one of the most important that we shall be debating this morning. The guidance will be critical. As the Minister made clear, the director will be susceptible to it because he will have to respond to it. In itself, I do not take great exception to the guidance note, apart from flagging up the interesting issue under point 5 about whether the Bill applies to all crime generally rather than to crime for gain.

Having said that, I am deeply troubled by the prospect that the paper is only guidance note No. 1 and that a great deal more guidance notes will regulate the manner in which the director operates. They will fetter his discretion and we may end up with a system of administrative enforcement that is dictated by politicians and that will bring the mechanism of the Bill into disrepute. As I said to the Minister on Second Reading, we support the principle behind the clause. It is important that those who enrich themselves through crime have their assets removed.

Bob Ainsworth (Labour, Coventry North East)

The amendment would remove the requirement on the director to have regard to the guidance given to him by the Secretary of State about how he might exercise his functions in a way that is best calculated to contribute to the reduction of crime. The Secretary of State would then have no statutory authority to give guidance to the director at all. The amendment would not prevent the Secretary of State from providing guidance but it would remove the obligation on the director to have regard to it.

The provision of guidance to the director by the Secretary of State is an important element in the operation of the new agency. The intention is that the guidance will help the director to fulfil his responsibilities under the Bill, and will focus on how he can best contribute to the reduction of crime in accordance with subsection (1). The Secretary of State is well placed to give such guidance, given his overall remit on the reduction of crime.

We envisage that the guidance will have two main functions. First, it makes clear that the Secretary of State's view is that the reduction of crime will generally be best achieved by the prosecution of offenders. That is important, and provides the reassurance that many hon. Members have sought. The pursuit of the proceeds of crime will not be used as a soft option and an alternative to normal prosecution. Normal prosecution should come first, and considerations on the recovery of the proceeds of crime should not impinge on that decision, which should be taken in the normal way.

Secondly, the guidance will set out how, in the Secretary of State's view, the various methods of asset recovery might contribute to the reduction of crime. The document that I have issued is not set in stone. It represents our current thoughts about what the guidance would be. I assure the hon. Member for Beaconsfield that it is not our intention to issue further guidance notes delving into other areas. That is the kind of guidance that we envisage is covered in the Bill, and that should be provided to the director. We do not intend that different aspects of the work should be covered in subsequent guidance notes, but that such guidance, or some variation of it, as we refine our thinking, is the guidance under which the director will operate.

Norman Baker (Liberal Democrat, Lewes)

I hear what the Minister says about not intending to issue further guidance. However, if it subsequently transpires, following enactment of this legislation, that further guidance is required, how will that be undertaken? What steps will be taken to ensure that Parliament is made aware of such guidance?

Bob Ainsworth (Labour, Coventry North East)

The hon. Gentleman raises an important point. We are setting up an agency that has no history in this country: it is a new venture. However, if a departure from the assurances given to the Committee was shown to be necessary by an unforeseen circumstance in the future, we would have to ensure that Parliament was given full oversight of any further measures. In relation to the current Bill, although this will not necessarily be the final document, guidance will be along the lines provided to the Committee, and will not allow the Secretary of State to intervene in the working of the agency and give directions, which, effectively, would result in a politically directed agency pursuing the proceeds of crime. All aspects of the agency must be free from direction and independent.

First, we want to ensure the primacy of the pursuit of the criminal through the normal processes of the law, as that is the most important element in reducing crime in this country, and the pursuit of the proceeds of crime must always be secondary to that. Secondly, guidance must be given as to the hierarchy that should be used for the different powers in the Bill. If someone is being pursued through the criminal courts, and is being convicted of an offence, confiscation should be the normal route by which the proceeds of crime should be sought. Only if that does not happen should we start considering civil recovery and, if that is not a possibility, we should examine the taxation of the proceeds of crime. It is sensible to give the director such guidance and not allow him to be a free agent in how he uses the powers that we are giving him and the order in which he chooses to pick up the different tools with which we have provided him.

Stephen Hesford (Labour, Wirral West)

Does the Minister agree that the Secretary of State is best placed to hold the ring between prosecuting a crime and the proceeds of crime? That is why the measure is important.

Bob Ainsworth (Labour, Coventry North East)

Absolutely. The director will be accountable to Parliament for his decisions. I do not know whether the hon. Member for Beaconsfield has left the Committee, but he referred to point 5 in the guidance note and said that it applied to all crime, not only to acquisitive crime. The agency will not be concerned with crime that does not involve acquisition. It will not be involved in anything other than proceeds, so acquisitive crime will be the maximum area with which it will be concerned. I do not know whether that paragraph is problematical. From first reading, I do not think that it is, but I am happy to consider it and make absolutely certain that it is not a problem. Point 5 states:

``Where a criminal conviction has been obtained, the Secretary of State considers that the use of criminal confiscation is a method of targeting the proceeds of crime which will best contribute to the reduction of crime.''

Given that the proceeds of crime are being targeted, we are talking about acquisitive crime.

Dominic Grieve (Conservative, Beaconsfield)

I apologise that I was not in the Room when the Minister first drew attention to that point. I was called out for a moment. I am grateful to him for his reassurance. It goes some way towards meeting my anxiety.

Bob Ainsworth (Labour, Coventry North East)

Given that response, I invite the hon. Gentleman to withdraw the amendment.

Mr. Alistair Carmichael (Orkney and Shetland) rose—

John McWilliam (Labour, Blaydon)

Does the hon. Gentleman want to speak?

Alistair Carmichael (Liberal Democrat, Orkney and Shetland)

If the amendment has been withdrawn, I cannot make a contribution to the debate.

John McWilliam (Labour, Blaydon)

The amendment has not yet been withdrawn.

Alistair Carmichael (Liberal Democrat, Orkney and Shetland)

Alarmingly, I find myself in agreement with a great deal of what has been said from the Conservative Front Bench. However, I would be seriously worried if Conservative Members ever tabled an amendment that reflects their rhetoric. There is a serious point to be made about setting up arm's-length agencies. The amendment would weaken parliamentary accountability. If the requirement were for the director merely to take account of—not necessarily to follow—the mandatory power, rather than the discretionary power, an element of parliamentary accountability would be lost. That is a more important principle than second-guessing what may or may not be contained in future guidance that may be given to the director of the agency.

Dominic Grieve (Conservative, Beaconsfield)

The hon. Gentleman's comments have considerable force and one of the purposes of Standing Committees is that probing amendments are tabled to elicit explanations. As that process proceeds, only a small minority of amendments may be put to the vote. I am grateful to the Minister's explanation because there are other parts of the Bill under which what type of crime will be bitten on in the confiscation process can be examined in more detail. However, in light of his reply, I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

David Wilshire (Conservative, Spelthorne)

I draw attention to a couple of points that could bear a little scrutiny so that we know the Minister's thinking. The point that I made earlier becomes relevant for the first time in relation to subsection (3). It states:

``The Director may do anything (including the carrying out of investigations)''.

I flag up what I said earlier: it might be unsuitable for certain employees—and, perhaps, some staff who are contracted to provide services—to be involved in the carrying out of investigations. The Government might wish to clarify what the director can and cannot delegate, because skilled specialists ought to carry out such sensitive activities, rather than anyone whom the director might engage.

I also wish the Government to reflect on a more important point. Subsection (4) states that

``subsection (3) does not allow the Director to borrow money.''

I understand why that point has been made. I could discuss the issues that it raises at length, but I do not intend to do that now. Later, however, the Committee might need to debate the point.

Subsection (4) has relevance to subsection (2), which states:

``In exercising his functions as required by subsection (1) the Director must—

(a) act efficiently and effectively''.

I am surprised that the word ``economically'' has not been included in subsection (2)(a), particularly as the director is not to be allowed to borrow money, because if you are not allowed to borrow money, the pressure to act economically becomes overwhelming.

John McWilliam (Labour, Blaydon)

Order. Nobody has said that I cannot borrow money. I have never had any problems in that regard. I am being picky because many new Members are present and they must learn how to speak correctly in the Committee: the word ``you'' is employed only to refer to the Chairman.

David Wilshire (Conservative, Spelthorne)

It has taken me 14 years to fail to learn such conventions. I hope that the new Members will take less time than that successfully to learn them.

I apologise for suggesting that you need to borrow money, Mr. McWilliam. Unlike me, you do not need to do that. Perhaps you could advise me how to organise my private life so that I do not have to borrow money.

If the director is to be prevented from borrowing money, the Government might wish to add the word ``economically'' to subsection (2)(a), because when I was involved in local government, and subsequently, when I became a Member of Parliament, I was constantly reminded that the three Es meant efficient, effective and economic, and they used to enjoy the support of the entire House, rather than merely my party.

The director must act in each of those three ways. The efficiency with which he does his job will, perhaps, be tested by examining the processes that he follows, and his effectiveness will be measured by assessing the outcomes. However, it would not be sensible for the agency and its director not to be subjected to a debate about whether they are costing too much. The principle of value for money must be upheld—even with regard to the activity under discussion.

The director or his staff might decide to pursue the proceeds of a crime and it might transpire early in the investigation that those proceeds will not amount to much. The director should be asked to justify himself, particularly when there is a possibility that the cost of recovery will exceed the sum recovered. That is an important point and it should be debated. Nothing is to be gained by vindictively chasing people when ultimately it is the taxpayer who loses, rather than the criminal. In such circumstances, the concept of the director economically going about his work is just as valid as efficiently or effectively going about his work. Will the Government reflect on that and consider whether they might table an amendment of their own?

Alistair Carmichael (Liberal Democrat, Orkney and Shetland)

I associate myself with the earlier remarks of the hon. Member for Glasgow, Pollok about parallel provision in Scotland and the rest of the United Kingdom, and in particular about the functions that might be carried out by the Lord Advocate north of the border.

Parts 2 and 3 largely replicate each other, although part 3 wears a kilt, and makes appropriate provision for Scotland. However, no direction is given to the Lord Advocate such as is given to the director of the Assets Recovery Agency in part 1. Such direction seems to be missing.

The Crown Office in Scotland publishes an annual report that includes performance indicators and targets. However, an important point is involved. Historically, the office of the Lord Advocate has never been keen on disclosing an ounce of information more than it absolutely has to. If such provision is to be made, will the Minister speak to his opposite number in the Scottish Executive in order to establish whether, when the time comes to consider amendments to part 3, further measures might be introduced to improve the position north of the border?

Mark Field (Conservative, Cities of London and Westminster)

Subsection (3), which relates to the director, refers in brackets to

``including the carrying out of investigations''.

That power seems broad, especially if it allows the director to initiate investigations or further or repeated investigations of particular individuals. Anxiety will be expressed about the breadth of the director's powers.

How does the Minister envisage that the provision will work? The clause refers to

``the exercise of his functions''

and specifically giving the director the power to carry out investigations. Is that envisaged? Will safeguards be provided relating to the director's duties for people who are subject to investigation or further, repeated or extended investigations?

Nick Hawkins (Conservative, Surrey Heath)

I take very seriously the comments of the hon. Member for Orkney and Shetland (Mr. Carmichael) about parallel provision in Scotland. I do not claim to be an expert on Scots law, but some years ago, as a practising barrister in the midlands, I did a lot of work in Corby, where there are many people from Scotland. During that time, I had links with Scottish lawyers who dealt with cross-border cases. From that limited experience, I understand entirely his anxieties. The problem is that the bases of the Scottish and English legal systems are, as we all know, entirely different. Scots law is a Roman-law system, and English law is a common-law system.

I realise that no Government can make identical provision for north and south of the border, but both the hon. Member for Orkney and Shetland and the hon. Member for Glasgow, Pollok, who raised the matter in an earlier debate, are right to say that anxiety should be expressed if the provisions do not seem to operate in an entirely parallel way. I and my hon. Friend the Member for Beaconsfield will examine carefully more of the Scottish provisions later, and perhaps now is a good time for the Minister to deal with some of those points.

On the breadth of the director's powers, we are indebted to the Minister for the guidance that he gave us just before the Committee sat. I saw it for the first time this morning, although my hon. Friend the Member for Beaconsfield saw it late yesterday. I ask the Minister—I know that it is not his fault, and that we are only at the start of the Committee—to ensure that he gives us any further documents with a little more than 24 hours' notice, if possible. I am sure that he will respond to that if he can.

Opposition Members are concerned about the Government's proposal to give directors such broad powers because those who work in the City of London and elsewhere are bound to feel concern that such powers might be used oppressively against those who are responsible for our enormously successful financial institutions. The Government do not consciously wish to damage the important contribution that the City of London and banking institutions make to the United Kingdom economy, but, as the Minister will acknowledge when he responds, the British Bankers Association expressed concerns in its response to the consultation on the draft Bill.

My hon. Friends and I shall raise many of the concerns felt by the BBA and other City of London institutions, even though the Government took note of some of their points in the consultation.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

Does the hon. Gentleman accept that if the BBA and others had put their own house in order, the Government would not have needed to introduce the legislation?

Nick Hawkins (Conservative, Surrey Heath)

I do not accept that. I take the hon. Gentleman's views on the matter seriously, but he should recognise that some City of London scandals were caused by rogue financial institutions that have never been members of reputable bodies such as the BBA. He should consider carefully the membership of such reputable organisations. I am aware of such rogue institutions because I have worked for four of the major British clearing banks in the City, and advised them not to issue a credit card to the now infamous Bank of Credit and Commerce International.

I have professional experience of trying to stop rogue banks operating. Unfortunately, the rogue BCCI succeeded in defrauding many bodies, including, as the hon. Gentleman will recall, some local authorities. I seem to recall that one of them was Orkney Islands council.

Bob Ainsworth (Labour, Coventry North East)

Western Isles.

Nick Hawkins (Conservative, Surrey Heath)

The Minister rightly corrects me, and points out that the Western Isles council was one of those that suffered enormously in the BCCI scandal.

One must distinguish between reputable and disreputable financial institutions, and we are concerned that reputable organisations' views should be taken on board.

I hope that the Minister will confirm that when his officials draft further guidance, they will take advice from a range of bodies that are already involved in the investigation of fraud, including the National Criminal Intelligence Service, the Serious Fraud Office, special branch, and the fraud squad of the Metropolitan police and other police forces. I hope that he will tell us whether those bodies are being consulted by the Government and their officials on the breadth of the powers given to the director.

The director's powers should be specified clearly because he will have to confront a problem that was highlighted in today's press through the comments of Mr. Justice Scott Baker, a judge in front of whom I have appeared, and whose judgment I very much respect. The Minister will not want to comment in detail on current civil proceedings—nor will anyone else, as the proceedings are sub judice—but I refer to those matters that are in the public domain in today's papers. I do so to show the complexities of the matter.

I hope that the Minister will state that he takes seriously the concerns that many reputable bodies, as well as Opposition Members, have expressed on the subject of the breadth of the director's functions. I hope that he will say more about that later. If he can reassure us, we shall be happy for the clause to stand part of the Bill.

John McWilliam (Labour, Blaydon)

Before I call the Minister, I thank the hon. Member for Surrey Heath for reminding me of something that I should have said at the start of our proceedings and that may be helpful to hon. Members who are not familiar with the system. When selecting amendments, we do so on the basis that we have one argument on one subject. I refer to amendments the principle of which has already been disposed of. If there are attempts to readdress that principle in relation to Scotland, such amendments will not be selected.

Bob Ainsworth (Labour, Coventry North East)

The clause sets out the director's general functions and the underlying purpose of the Bill is the reduction of crime through the recovery of the proceeds of crime. It therefore requires the director to exercise his functions in a way that he considers best calculated to contribute to the reduction of crime. The director's five main functions are set out in other clauses. First, he will share the confiscation functions of the law enforcement and prosecution authorities. In a criminal case, those authorities will be able to ask him to handle the financial investigation and the confiscation aspects while they concentrate on the criminal investigation and proceedings.

Secondly, the director will have sole authority to operate the civil recovery function in part 5. Thirdly, he will have sole authority to operate the tax powers set out in part 6, in particular to make sourceless tax assessment. Fourthly, he will train and accredit financial investigators who will be able to apply their skills in their own organisations. Finally, he will be required to advise the Secretary of State on matters relating to asset recovery. We envisage, in particular, that he or she will play a leading role in the development and implementation of the assets recovery strategy.

The director will be required to exercise his functions efficiently and effectively. When the hon. Member for Spelthorne first referred to that, I was of the mind that I did not know what the word ``economically'' would add to those two requirements. I can remember the strictures of the three Es being thrown at me. If I thought that the word added something, I should be more than happy to see it alongside the two Es under the Bill. While I reflect on whether the word will add anything, I ask him to think about how far we can go with the language. Surely the last thing that we want is for the director not to apply his powers ``adequately'' to the problems. Let us add that to the requirements and we can have three Es and an A.

I accept the hon. Gentleman's point that we do not want people pursued at great cost to the agency for relatively small amounts of proceeds. If ``economically'' adds something to the provision, I am happy to consider it. However, I believe that the director's functions are covered by the term ``efficiently and effectively''. Perhaps the hon. Gentleman will reflect on how far we can go with the language.

David Wilshire (Conservative, Spelthorne)

As the Minister reflects on the matter, so shall I. There is something to be gained, however, by drawing attention to the fact that the director should take into account whether it is cost-effective to pursue a particular line of inquiry. More than anything else, taxpayers would not forgive us for spending more of their money than they received back. That is an economic argument. We can compare the different approaches of the Inland Revenue and of Customs and Excise, one of which applies more readily than the other the argument about whether it is worth while taking such action. I hope that the director will be charged with asking whether such action is worth his while.

Bob Ainsworth (Labour, Coventry North East)

The point is well made. If that point is not covered by ``efficiently and effectively'', we should seriously consider adding another word. If it is, however, the point should be accepted as being made.

Paul Stinchcombe (Labour, Wellingborough)

I wonder whether the point is well made. I thought that the principal purpose of the legislation was to stop crime being attractive, not to raise revenue.

Bob Ainsworth (Labour, Coventry North East)

My hon. Friend is absolutely right. The purpose is not to raise revenue. The agency is required to contribute to the reduction of crime, and, in operating efficiently and effectively, that must be its guiding star. A purely money-based decision on whether to pursue a case is not appropriate. If an amount of money could be confiscated by one of the powers under the Bill from a particular individual, that could prevent great misery from being caused by that money being reinvested in the acquisition of drugs, which would cause serious problems on the streets of our cities.

Boris Johnson (Conservative, Henley)

I wonder whether we need both words. Is it possible to act efficiently without acting effectively, or to act effectively without acting efficiently? Perhaps we could save some ink by getting rid of one of those words.

Bob Ainsworth (Labour, Coventry North East)

We now see the efficient and effective minimalist wing of the Conservative party disagreeing with the hon. Member for Spelthorne. The hon. Gentleman properly raises the question of how far to go with the language, and whether adding or taking away words contributes anything of substance.

David Tredinnick (Conservative, Bosworth)

On the point raised by the hon. Member for Wellingborough (Mr. Stinchcombe), I must have not quite understood the thrust of the Bill. I had thought that the idea was to address the fact that, up to now, we have been unable to obtain as much money through confiscation as we hoped to obtain. We are hoping to achieve a higher level of revenue from the criminal fraternity overall. Would the Minister elucidate on that point?

Bob Ainsworth (Labour, Coventry North East)

That issue is central to the debate. In setting up the agency, we do not regard the recovery of the proceeds of crime as the end in itself. We regard it as the tool by which we reduce crime. By taking the profit out of crime, we discourage people from becoming involved in the activity in the first place.

On Second Reading, I referred to the public service adverts from many years ago, which many hon. Members will remember, telling us that crime does not pay. I am afraid that crime does pay, which is why many people become involved in it. It is about time that we took adequate measures to try to ensure that it does not pay. Recovery of the proceeds of crime is not the aim of the Bill but the method by which we seek to reduce crime. What are those proceeds used for? Often, they are used and invested to compete unfairly with law-abiding businesses and enterprises, as people want to launder them and legalise them by putting them into the legal part of the economy. We do not want that to flourish in this country, because it undermines legitimate interests and businesses. Proceeds are also reinvested to provide the wherewithal by which yet more crime can be committed. Those are the motives for confiscation. It is not a question of merely gaining access to the money itself.

David Wilshire (Conservative, Spelthorne)

I have listened to the Minister's comments. However, even if the purpose of the Bill is not to make a profit for the taxpayer, that does not undermine my argument. If the purpose is to punish rather than make a profit, there must still be a point at which the cost of recovery could become so great that there is an economic argument for using public funds to deter crime in another way, instead of pouring it into an activity from which the amount of recovery is so small.

Bob Ainsworth (Labour, Coventry North East)

The matter is not set in stone. Just because the agency has a requirement to deal with the reduction of crime, it should not be completely blind to the spending of its resources in the pursuance of the proceeds of crime. If it does that, it will waste the funds with which it has been provided and it will be less than effective in achieving the reduction of crime. I am happy to reflect on whether ``economically'' would add anything to the Bill. If it does, I will try to put it in, but I am not certain that it will.

Vera Baird (Labour, Redcar)

Would not it be a misapplication of principle to incorporate the word ``economically'' into the clause, because it could restrict the director's freedom in cases in which there may be an uncertain balance whether the inquiry would produce more than it cost? The aim of crime reduction by targeting a middle-level profit maker would remain essential. Is not the suggestion that ``economically'' should be included in the clause misguided?

Bob Ainsworth (Labour, Coventry North East)

That is why I said that perhaps we should think about whether the word ``adequately'' should also be added. It is a dilemma and the last thing that we want is to send the agency the wrong signals.

Ian Lucas (Labour, Wrexham)

Is not the primary purpose of the Bill to deter? For example, the general public must realise that, if they commit a drug-trafficking offence, enforcement action against them will follow. Saying that an economic assessment will be made of whether the Assets Recovery Agency should proceed will diminish the deterrent effect of the Bill, the primary purpose of which is to reduce crime and deter people from becoming involved in it in the first place.

Bob Ainsworth (Labour, Coventry North East)

My hon. Friend is absolutely right. When deciding what matters should be pursued, we need to bear in mind what the individuals who are in possession of the proceeds of crime are capable of doing with them. We must consider what a well-placed person in an organised crime gang can purchase with a relatively small amount of criminal proceeds if he has access to wholesale, upstream heroin or cocaine. What is his ability to use that money to make a substantial profit? Such considerations must be taken into account when issuing guidance to the agency.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

Given the way in which Conservative Members are supporting the proposal as a clawback measure and an income raiser, this is one of the few occasions on which they have endorsed a stealth tax. My hon. Friend should resist the proposal to include the word ``economically'' because there is a real danger that the targets will be distorted. If costs are weighed against probable revenue, projects will be rejected because they may reduce the averages and mess up the target scores. Risk assessments will raise the hurdle at which the decision to pursue a case will be made. The proposal is far more insidious than it at first seems.

Bob Ainsworth (Labour, Coventry North East)

Being the simple soul that I am, and completely trusting of all other Members of Parliament—

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

He used to be a Whip.

John McWilliam (Labour, Blaydon)

Order. Sedentary interventions are to be deplored. I used to be a Whip, too.

Bob Ainsworth (Labour, Coventry North East)

I took the suggestion of the hon. Member for Spelthorne at face value and assumed that he was trying to assist in making the agency more effective. I had not considered that he might have an ulterior motive: to attempt to undermine the agency's ability to do its job. I will have to reflect on that possibility when I consider his suggestions.

I turn to the points made by the hon. Member for Orkney and Shetland. On the accountability of the agency, only the taxation issues will apply to Scotland. However, he raised questions of accountability with regard to the Lord Advocate's Department. The Lord Advocate will have the responsibility to publish comparable targets for criminal confiscation in Scotland, and Scottish Ministers will be responsible for the publication of targets with regard to civil recovery. The Committee will discuss matters of accountability in more detail when it reaches the relevant parts of the Bill.

Alistair Carmichael (Liberal Democrat, Orkney and Shetland)

My point is that there is no compulsion on the Lord Advocate to publish those targets. The Crown Office voluntarily undertook to publish its annual report at the beginning of the 1990s, in response to the justice charter, but an element of compulsion should be placed on the Lord Advocate.

Bob Ainsworth (Labour, Coventry North East)

It is appropriate for the hon. Gentleman to flag that issue. He is giving a warning that he will raise it again when the Committee reaches the relevant parts of the Bill, and the Government will respond to it in detail.

The hon. Member for Cities of London and Westminster expressed concern about the agency's powers, and the possibility that it might have to conduct repeat investigations. All the coercive powers that are provided for contain safeguards. That will become apparent when we get to part 8, which contains provision for proper oversight of the use of those powers.

The agency will be allowed to exercise non-coercive powers, such as the voluntary interviewing of witnesses, and I hope that the hon. Gentleman accepts that that should be the case. The Government seek to ensure that the agency will be able to exercise with a free hand powers that are not coercive or intrusive.

With regard to the use of the powers provided for in part 8, the Committee will want to be assured that the safeguards are adequate, so that they do not allow, for example, the on-going harassment of individuals. I think that that is provided for, but the hon. Gentleman might wish to explore the matter further.

I think that I have covered the points that have been raised—but the hon. Member for Surrey Heath is looking annoyed with me for having said that.

Nick Hawkins (Conservative, Surrey Heath)

I was not annoyed with the Minister: I was seeking to jog his memory, as he has not addressed my questions concerning bodies such as NCIS.

Bob Ainsworth (Labour, Coventry North East)

NCIS, the National Crime Squad and similar agencies were consulted as part of the preparation of the Bill. They were also involved in the discussion that took place before the draft Bill was produced. All those agencies are supportive of the Government's measures. We have taken their guidance into account, and they are happy with our proposals.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.

Clause 3 - Accreditation and training

Nick Hawkins (Conservative, Surrey Heath)

I beg to move amendment No. 3, in page 2, line 23, leave out `must' and insert `may'.

Amendments Nos. 3 and 4 are not being taken together, but they have the same aim, and I wish to explain it. As drafted, the Bill says that the director must establish a system for the accreditation of financial investigators. That is entirely new. As we do not yet know the identity or background of this director, surely the Government should trust him to decide how he carries out his job. We felt that it would be far better if the legislation were permissive rather than compulsory. Once the Government have had their selection procedure and made their appointment, the director, presumably a person with some relevant expertise, might decide that setting up a system for accredited financial investigators was not the way to go.

A recent comparable case, which will be familiar to all members of the Committee, shows how the Government might find that someone whom they had appointed held rather different views from theirs. The Government's much vaunted drugs tsar, Mr. Keith Hellawell, was going to tackle the drugs problem, but now, as the Minister and I were debating only the other evening on the Floor of the House, Mr. Hellawell's policy has been completely torn up by the new Home Secretary. His position has been reduced. His public statements are completely at odds with the new Home Secretary's new policy. If the Government imposed the clause as currently drafted they might find that they had appointed a director who took a different view.

John McWilliam (Labour, Blaydon)

Order. This is a narrow clause. It concerns accreditation and training—nothing else.

Nick Hawkins (Conservative, Surrey Heath)

I am grateful to you, Mr. McWilliam, but you will understand why we wish to draw a comparison with recent events. This is indeed a narrowly drawn clause but the distinction between what is compulsory and what is permissive is important. It is an issue that will crop up in other clauses. We will have quite a few debates about the use of ``must'' or ``may''. We will be interested to hear the Minister's justification for this being compulsory.

Steve McCabe (Labour, Birmingham, Hall Green)

I wonder whether we are beginning to witness the first signs of an Opposition rift. Earlier, the hon. Member for Cities of London and Westminster urged the Minister to ensure that the person appointed director had the knowledge, training and experience to carry out the job. Then the hon. Member for Spelthorne expressed his concern that the canteen lady might be asked to perform duties beyond her capability. Now the hon. Member for Surrey Heath is arguing that any Tom, Dick or Harry could be the financial investigator and that it does not matter whether they have any training or accreditation. Does he feel any embarrassment about the different positions adopted by his colleagues?

Nick Hawkins (Conservative, Surrey Heath)

That was a nice try, but the hon. Gentleman's point had a significant flaw. His description of my argument was incorrect. We are not saying—

John McWilliam (Labour, Blaydon)

Order. It had another significant flaw. It was not relevant to the amendment and should not be discussed further.

Nick Hawkins (Conservative, Surrey Heath)

He nevertheless reached the end of his point. My point is not that any Tom, Dick or Harry could be a financial investigator. That is not what the amendment is about. We say that the director may establish a system for the accreditation of financial investigators if he so wishes, but that it would be wiser for the Government to leave it to the director to see whether that is how he wishes to conduct the affairs of the new agency. How widely has the Minister consulted? When I reminded him about it on the previous clause, he talked about consultations with the National Crime Squad and NCIS but he did not touch on the Serious Fraud Office, fraud squad and special branch.

Have the Minister and his officials talked to the Financial Services Authority? I have fairly extensive experience of the current and past regulatory structures in the City of London, which were at the core of my job when the regulatory system was much more complex and parts of the City of London had different regulatory bodies. The Government have created a new, super-regulator—the Financial Services Authority—and we want the Minister to tell us whether it is happy with the blanket powers that the Government propose.

Is it anticipated that one of the pools of recruitment for the new accredited financial investigators will be people who currently work for bodies such as the Serious Fraud Office and the FSA? Will the financial investigators have access to some of the existing databases? I was horrified to learn that a good financial database that was built up by an earlier regulatory body, known by the acronym FIMBRA, is being thrown away. That is relevant when the role of the new accredited financial investigators is being considered and we are deciding whether the power should be compulsory or permissive. FIMBRA built up a superb computer database with which to track the rogues: an independent financial adviser who had defrauded people in one part of the country could be tracked if he moved somewhere else and prevented from operating. Accredited financial investigators will need to have such skills, and we want the Minister to tell us whether the people's experience in the City in the past 10 or 15 years, when the current process of regulation was being developed, will be used.

David Tredinnick (Conservative, Bosworth)

Does my hon. Friend agree that a regrettable prejudice against the City can be detected in some contributions from Labour Members? My hon. Friend the Member for Cities of London and Westminster made an important point: if we do not listen to the City, which is the main financial centre in Britain, we will be enacting an measure that does not carry with it a large proportion of those who will have to work with it.

The hon. Member for Birmingham, Hall Green (Mr. McCabe) suggested that there were rifts among Opposition Members, but there are divisions among Labour Members, and not just in the Lobbies. Before he fires his arrows at the Opposition, he should ponder some of the statements made by his hon. Friends.

John McWilliam (Labour, Blaydon)

Order. That intervention was rather wide of the mark. I remind hon. Members that interventions are supposed to be brief. Hon. Members who want to catch my eye can do so.

Nick Hawkins (Conservative, Surrey Heath)

I am grateful for my hon. Friend's intervention. He is right. He shares my interest in financial services regulation and in that respect it is fair to say that one of the most active—

John McWilliam (Labour, Blaydon)

Order. The hon. Gentleman should not pursue the matter. Let us stick to the amendment, which is strictly on the subject of accreditation and training.

Nick Hawkins (Conservative, Surrey Heath)

Yes, Mr. McWilliam.

I have raised the Opposition's concerns on the matter and I shall be interested to hear what the Minister has to say. Unless he can satisfy us, we may have to return to this important point on Report and in another place. I hope that if he cannot accept the amendment he will at least undertake to reflect with his officials on whether we may have a serious point. We are happy for the director to have some powers, but they should be permissive, not compulsory.

If the Minister undertakes to reflect on that and says that if he decides on reflection with his officials that we may have a good point and that he might table a Government amendment, that would be helpful. However, if he does not, we may have to return to the matter. I suspect that such issues will be regarded with considerable anxiety by people involved in the City of London, who follow our proceedings with care.

Stephen Hesford (Labour, Wirral West)

I urge my hon. Friend the Minister to reject the amendment. The director must satisfy himself that the financial investigator is able to do the job. That will also ward off what I would categorise as attacks from people in the City. If financial investigators were not accredited, their work would be more open to attack from those in the City. With respect, I suspect that that is precisely the point that Opposition Members are making.

Alistair Carmichael (Liberal Democrat, Orkney and Shetland)

I am much more comfortable saying that, on this occasion, Liberal Democrat Members disagree not merely with the rhetoric but with the amendment. In moving it, the hon. Member for Surrey Heath referred to the construction of the Financial Services Authority, and he makes a valid point inasmuch as that was a chequered, difficult and involved procedure. In my experience of such matters, if something is difficult, reasons can be found for not doing it unless it absolutely has to be done, and for that reason the inclusion of ``must'' instead of ``may'' is important. I return to the point that I made earlier about the importance of Parliament making a clear statement on the direction of what will be an arm's-length agency.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

The Bill states that the director must establish a system. Could he establish two systems? Will there be a Scottish equivalent of ``accredited financial investigator'', or will the one category cover both? Legal and financial measures are sometimes different in Scotland, and I should be grateful for the Minister's clarification.

I hope that if we find that we must have one system, two methods—

Nick Hawkins (Conservative, Surrey Heath)

To coin a phrase.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

Thank you. I hope that in such circumstances we would ensure that as far as possible we avoid producer domination. In the event of differences in nuance between the Scottish and English systems, enormous scope will exist for separate courses, lecturers and accreditation, and enormous costs will be built up by the producer interest. I hope that we would ensure that any differences are minimal.

I take it that this will be our only argument over the question of ``must'' and ``may'' and that if the matter is resolved in this case it will not arise as a matter of principle at later stages in the debate. This seems to be the first attack by the Conservatives, who are trying, have tried and will continue to try to emasculate the Bill by inches—or rather, centimetres.

I do not believe that everyone in the City is a crook, but I do not believe that they are all not crooks, either, and the fact that the City and some professions such as lawyers, bankers and accountants have failed to put their own house in order means that the Government have to take action. Simply saying that the City creates some wealth for the country as a whole does not mean that any practices that take place there must be allowed to continue willy-nilly. It would be far better for the country as a whole if the Conservatives showed some anxiety about the lawyers, bankers and accountants in the City and elsewhere who help distribute the proceeds of crime.

John McWilliam (Labour, Blaydon)

Let me tell the hon. Gentleman that the meanings of ``must'' and ``may'' vary enormously, and make the difference between a probing amendment and a matter of extreme principle. Amendments will be selected according to whether they are in order.

Ian Lucas (Labour, Wrexham)

I, too, urge the Minister to reject the amendment. The creation of a system of accredited financial investigators will form an important check and balance on the director of the agency. That will make the agency more effective, because any complaints about a person's conduct can be measured against that system. There is no reason why the director cannot be closely involved in setting up the accreditation system of financial investigators. It is important that the system is put in place, and that the director helps to set it up.

Mark Field (Conservative, Cities of London and Westminster)

I take on board the points made by the hon. Members for Glasgow, Pollok and for Wrexham (Ian Lucas), but we must be flexible. Opposition Members would rather use the word ``may'' than ``must'', given the great demands that will be placed on the director of the agency to involve many people—not just those who are regulators already, or those who are compliance officers in the Financial Services Authority, but professionals in law firms, accountancy firms and banks.

I do not wish to stray from the subject, but I would like to address the matters raised by the hon. Member for Glasgow, Pollok. There is no risk of Opposition Members going easy on the City. My constituency includes the City of London and its financial and commercial interests. It does the country no great favours if financial services have an easy regime. I share his concerns about the bad apples in the barrel. We must do all that we can to ensure that they are rooted out and exposed, but as I mentioned on Second Reading, we are concerned about loading more and more regulations on large City institutions, particularly at this end of the economic cycle.

An army of compliance officers will have to be employed as a result of much of what we will discuss in the weeks and months ahead. As a result, business will be gridlocked, and I am concerned that the majority of legitimate business may go elsewhere, out of the City of London. That would damage the interests not only of the City, but of Europe's fifth largest financial centre, Edinburgh.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

That is a helpful point, but such arguments for flexibility and light regulation serve indirectly as arguments for the creation of loopholes. It would be better if the hon. Gentleman and his colleagues produced workable alternatives that satisfied his and our objectives for the Bill.

Mark Field (Conservative, Cities of London and Westminster)

There will be plenty of opportunity in considering the remaining 441 clauses to draft workable alternatives. I take on board the hon. Gentleman's point. We want to be constructive in the early stages of the Bill, and on the subject of light regulation. That is why we tabled the amendment. I have listened carefully, as we all have, for the past 20 minutes. I am not going to guess what my hon. Friend the Member for Surrey Heath will do with the amendment, but if we divide on it, we will know where we stand on the subject.

Bob Ainsworth (Labour, Coventry North East)

It will be interesting to see how independently minded the hon. Gentleman will be when the hon. Member for Surrey Heath calls for Divisions in future. It is often alleged that the Government do not permit independent judgment, but some has already been displayed in the Committee, so we shall see whether there is any independence among the Opposition. For reasons that have been exposed by my hon. Friends and the hon. Member for Orkney and Shetland, I shall not reflect on the issue. I say, in particular, to the hon. Member for Surrey Heath that there are two main motivations for accreditation, one of which is to lift standards and to ensure that we have a cadre of decent people with the necessary skills to use the powers under the Bill. The performance and innovation unit study exposed the fact that we were short of such skills in this country, which was part of the reason why the confiscation of proceeds of crime was not effective here. That is only one of the motivations for the giving the director—or, rather, directing the director of the agency to provide an accreditation system. Unless we have such an accreditation system as a gateway to the powers under the Bill, we will have no control over the quality of the people who are using the powers—unless it is the Opposition's intention that those powers not be used. Such powers are at the heart of the Bill.

The purpose of an accreditation system is to provide people who are necessary to carry out the functions and to raise the capacity and quality in such an area and to provide necessary safeguards, so I cannot accept the amendment. My hon. Friend the Member for Glasgow, Pollok asked whether there will be two systems. We are not dictating to the director that there must a simple system of accreditation. It will be for him to decide what level of training is necessary for the different people in the agency and whether there should be different levels of accreditation. To use the powers under the Bill, people will need to attain a level of accreditation.

Under the Bill, there will not be accredited financial investigators in Scotland. However, we do not envisage barring Scottish people from becoming accredited or from being trained in the centre of excellence. When we come to the parts of the Bill that apply to Scotland, the Committee will see that the necessary provision for quality control of people north of the border needs to exist as it does within the agency itself.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

I raised the point because of what my hon. Friend said earlier about cross-border traffic. I want Scottish investigators to continue to be able to pursue cases in England and Wales with co-operation, and vice versa. We do not want to have courts or lawyers in the respective countries demanding that certain matters be ruled out on the basis that accreditation gained elsewhere is not recognised. I hope that he recognises that and will ensure that the Bill takes account of that potential difficulty, which will be exploited by bad people.

Bob Ainsworth (Labour, Coventry North East)

My hon. Friend is absolutely right and I am sure that one of the reasons why he wanted to be a member of the Committee was to make certain that there is the cross-border co-operation that is required to make the Bill effective. Such discussions are on-going and many of them have already taken place. There must be cross-border co-operation. If we provide a loophole, we can rest assured that it will be exploited to the full to circumvent the measures that we are taking to recover proceeds of crime. I fully accept my hon. Friend's point.

For the reasons that I have stated, I cannot accept the amendment. I ask the hon. Member for Surrey Heath to withdraw. If he does not, I shall have to ask my hon. Friends to vote against it.

Nick Hawkins (Conservative, Surrey Heath)

I am disappointed by the Minister's response. I had hoped that he would register our concern that the director, once appointed, should have the discretion to decide whether that was the way forward. The Minister was didactic and said that he was certain that he wants the Government to direct the director. He almost gave the game away, however, when he nearly made a slip of the tongue. He was about to say that that is why the Government want the director to have those powers, which our amendment suggested, but he stopped himself just in time and said that that is why the Government want to direct the director. We all heard that, and it will be recorded in Hansard. The Government want to direct: that is instinctively part of their approach. As I mentioned in the case of Mr. Hellawell, the drugs tsar, it is a problem only when the Government reverse their policy by 180 deg, and direct in the other direction. Precisely because of that recent U-turn, and other recent policy U-turns, especially in the Home Office, we felt that it would be wiser for the Bill to be permissive, as the amendment suggests.

Despite what the Minister says, perhaps he will reflect on that with his officials. I want to reassure the hon. Member for Glasgow, Pollok that we are not engaged in a bid to emasculate the underlying intention of the Bill. As we said on Second Reading, and as my hon. Friend the Member for Cities of London and Westminster pointed out, we support the underlying intention. However, the purpose of parliamentary scrutiny is to try to get a Bill that works. We want to differentiate between reputable financial institutions, on which the economy of our country and the whole of Europe is based, and rogue ones. We want the Government's regime to be effective, but it is not sensible to be didactic and to impose a straitjacket on the director.

I was interested by what the hon. Member for Orkney and Shetland said, which strongly supported the Government's original drafting. All of us who have been involved in this field have become accustomed to the hon. Member for Southwark, North and Bermondsey (Simon Hughes)—who normally leads for the Liberal Democrats on such issues—constantly asking for measures that are not didactic but permissive. Those are the normal libertarian instincts of his party. We may now be hearing a new authoritarian Liberal Democrat voice.

Norman Baker (Liberal Democrat, Lewes)

The hon. Gentleman is trying to impose a straitjacketed view, whereas our approach is to assess each amendment and proposal on its merits. It would be odd if Members of Parliament did not do that, as otherwise we could reach our positions before legislation is published, irrespective of the arguments that we encounter. It is, of course, disgraceful that my hon. Friend the Member for Southwark, North and Bermondsey should be so insulted in his absence. He will be deeply wounded when he learns of the hon. Gentleman's attack on him. I shall communicate it to him immediately after the sitting finishes.

This is the question that the hon. Gentleman must answer: does he not want investigators to be efficient, to be properly trained, to inspire confidence and to be resistant to any improper and unnecessary challenge to the work that they undertake? If he does want that, he should withdraw the amendment.

Nick Hawkins (Conservative, Surrey Heath)

I hear what the hon. Gentleman is saying. His explanation is no doubt consistent with the way in which Liberal Democrats argue for one policy in one constituency, and the opposite policy in the neighbouring one. We are all familiar with that. He has simply not understood what the amendment would do. We are not seeking to say that there should not be any financial investigators. The amendment does not say that the director should not have power to set up the system. We have not undermined every aspect, or sought to remove the whole clause. We have merely said that the director should have the freedom to decide on which direction he should take once appointed. The hon. Gentleman does his argument no service by consciously and deliberately seeking to misrepresent the effect of our amendment.

Bob Ainsworth (Labour, Coventry North East)

Does not the hon. Gentleman accept my point that the Bill requires accreditation to access the investigatory powers under part 8 and other measures elsewhere in the Bill? By potentially removing accreditation he goes attacks some of the capacity in the Bill.

Nick Hawkins (Conservative, Surrey Heath)

I do not accept the Minister's point. If one simply inserts ``may'' and gives the director that power, the rest of the powers are still there for him to use. It is probable that a director would wish to do something along those lines. As this is a totally new system we are philosophically disinclined to impose the straitjacket on a director when we do not know what his views will be in relation to the Government's overall scheme and strategy. The Minister came so near to setting out what we were hoping he would set out and, despite what he has said, he may reflect on it. I do not intend to press the matter to a vote but we may need to return to this on Report or in another place. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Nick Hawkins (Conservative, Surrey Heath)

I beg to move amendment No. 4, in page 2, line 35, leave out `must' and insert `may'.

Because so much of the debate on ``must'' and ``may'' has already taken place I can be extremely brief. We simply wished to make the two parts of clause 3 fit if amendment No. 3 was accepted. The Government did not accept it. We wanted to put the amendment on the amendment paper so that were the Government at a later stage and on more mature consideration to accept our general thinking, they could make subsection (5) fit with it as well. It is purely consequential on our amendment No. 3.

I am sure that the Minister will not accept this amendment, having rejected the earlier one. Again, it comes to the same point: we do not want to impose a straitjacket on the director. We simply wish that the clause gave the director powers. The Bill is extremely didactic and dogmatic. If that is the way that the Government want to go, so be it. I simply offer the amendment by way of consistency with amendment No. 3.

John McWilliam (Labour, Blaydon)

Is the hon. Gentleman not moving the amendment?

Nick Hawkins (Conservative, Surrey Heath)

I am moving it, as it important that it be on the record.

Bob Ainsworth (Labour, Coventry North East)

Let me take this opportunity to set out some of our thinking. The amendment would mean that the director would not be required to provide training in financial investigation or in the operation of the Bill. Under the Bill as currently drafted the director must provide for training in financial investigation. That will be delivered by means of a centre of excellence that will be established within the agency to carry out training and accreditation. A development manager for financial investigation has been appointed to the Home Office to oversee improvements in the delivery of training in advance of the legislation and to undertake planning for the centre of excellence.

Nick Hawkins (Conservative, Surrey Heath)

It would be helpful if we could be given some details of the person whom the Minister has just mentioned and his background. That would provide a helpful indication of the way in which the Government are moving in relation to future appointments.

Bob Ainsworth (Labour, Coventry North East)

The issue is already in the public domain. The person who has been appointed as the development manager is Mr. Charlie Dickin, formerly a detective inspector of Avon and Somerset constabulary fraud squad. He has taken up his post on secondment. We are not trying with that appointment to circumvent the decisions that will subsequently be taken about the direction of the agency but I hope that the hon. Gentleman realises or would accept that there are certain things that can be done by administration to lift our game on the recovery of the proceeds of crime. We do not want the measures that are provided in the Bill simply to come into a totally flat situation. We want to see agencies applying themselves and thinking about how the proceeds of crime can be better pursued in advance of the legislative framework that will enable them to go much further.

The director must also provide training to investigators and others on the operation of the legislation, in addition to other training on the provisions that will be given in advance of the implications for Crown Prosecution Service staff, for example. He will fund training activities from his general budget but will also have the power to charge for accreditation and monitoring, for example, where they are provided to the private sector. The purpose of the training will be to improve the standards and effectiveness of financial investigation and to ensure that people are aware of their powers under the legislation. Training will have a significant impact on the recovery of the proceeds of crime and should lead to the recovery of more criminal assets.

Financial investigation requires specialist skills. The PIU report concluded that among the reasons why financial investigation was under-used was a shortage of people with the right skills and the wide variety in the extent of training provided by agencies. That is why the director will be required to provide training in financial investigation. Training will have to be delivered in a consistent and co-ordinated way, which will increase the effectiveness of financial investigation. Although the director cannot be the only person providing training on the operation of the legislation, it makes sense for him to provide such training under the other limb of the training remit. The training is likely to be particularly relevant to financial investigators but could be opened up to other sectors if there were sufficient interest.

The Bill will help to ensure that financial investigators are trained to a consistently high standard and that the powers in the Bill are widely understood. Only if they are understood will they be as widely used as we hope. Training is an essential part of delivering the Bill's aims. In our view, the importance of the director's training function, in terms of financial training and training in the operation of the Bill, justifies requiring him to provide training. I hope that the hon. Gentleman will withdraw the amendment.

Nick Hawkins (Conservative, Surrey Heath)

The Minister's guidance was helpful. I am grateful to him for answering on the hoof, as it were, and giving details of the development director on secondment. I shall not repeat the points that I made on amendment No. 3. The two amendments stand or fall together. We will probably have to return to the issues, but in the light of the Minister's comments, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Further consideration adjourned.—[Mrs. McGuire.]

Adjourned accordingly at two minutes to One o'clock till this day at half-past Four o'clock.

Standing Committee B

Clause 3 - Accreditation and training

Roger Gale (Conservative, North Thanet)

Good afternoon, ladies and gentlemen. I am pleased to note that rapid progress has been made under Mr. McWilliam's wise chairmanship, and we are well on target to finish consideration of the Bill—by the early spring of next year. I am sure that we shall see a great deal of each other between now and then.

Those of you who have served under my chairmanship before will know that I tend to take the view that one may have a clause stand part debate before, during or after consideration of a clause, but not all three. On that basis, we come to clause 3 stand part. I understand that the clause has been fully and thoroughly aired during this morning's discussions, so unless any hon. Member has a burning desire to raise an issue that has not already been debated, I propose to put the clause to the Committee.

Question proposed, That the clause stand part of the Bill.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

Thank you, Mr. Gale, for that invitation to speak. [Laughter.] I shall endeavour to respond in the same spirit.

As these are clearly important matters, it would help if the Under-Secretary could tell us how much will be spent on accreditation and training in England and Wales. How much funding has been set aside for the Crown Office and the Scottish police service in respect of central training and additional financial investigators? How much has been set aside for training in, and co-ordination between, the relevant English, Welsh and Scottish bodies?

Bob Ainsworth (Labour, Coventry North East)

I cannot tell the Committee in detail what sums have been allocated to training alone. The Government have set aside £45 million for the Assets Recovery Agency, and we would expect an on-going provision of funds through the assets recovery strategy. As my hon. Friend knows, the situation in Scotland, where many of the agency's powers will not apply, is very different. In Scotland, existing customs officers and police will be expected to deal with confiscation by using the powers in part 2 of the Bill relating to the confiscation of criminal assets. A civil recovery unit will be set up in Scotland; it will be in the Crown Office, will it not?

Mr. Davidson indicated assent.

Bob Ainsworth (Labour, Coventry North East)

However, it is not envisaged that the unit will be very large. It should consist of about 10 people.

As I have said, discussions are taking place on the level of funding necessary north of the border to enable those powers to be used. Such funding will cover not only a civil recovery unit but a potential claim for funds to train, and to increase the skills of, the constables and customs officers who will apply confiscation procedures north of the border.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

Will the sums mentioned be separate and additional, or taken from existing budgets? If they are separate and additional, we can haggle about the amount later, once the principle is agreed.

Bob Ainsworth (Labour, Coventry North East)

The principle is that moneys will be provided to enable the Bill to be used in the same way north of the border as it will be used south of the border. To the south—but not necessarily to the north—moneys will go to the agency. In Scotland, they will go to the Crown Office and other appropriate law enforcement agencies.

Question put and agreed to.

Clause 3 ordered to stand part of the Bill.

Clause 4 - Co-operation

Roger Gale (Conservative, North Thanet)

Order. I apologise to the hon. Gentleman, but I have neglected the Committee's comfort. I understand that this morning Mr. McWilliam gave permission for hon. Members to remove their jackets if they wished, and I shall do the same.

Dominic Grieve (Conservative, Beaconsfield)

On the face of it, clause 4 is brief and largely innocuous. It is obvious that if the director is to exercise his functions he must have co-operation from other law enforcement agencies. Subsection (1)(a) refers to persons who have functions

``relating to the investigation or prosecution of offences''.

That is easily comprehensible; indeed, the explanatory notes specify

``police officers, officers of HM Customs and Excise and members of the Crown Prosecution Service and the National Criminal Intelligence Service.''

Clearly, all those people are concerned with the investigation or prosecution of offences. However, I am puzzled by the fact that subsection (1)(b) covers people who have functions ``otherwise relating to crime''. If the people that I have listed all fall within subsection (1)(a), why did those who drafted the Bill think it necessary to insert a further category under subsection (1)(b)? Who is being referred to?

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

Lawyers.

Dominic Grieve (Conservative, Beaconsfield)

I heard that sedentary intervention. However, as the Minister will know from several cases involving legal professional privilege, lawyers representing people who have been subject to prosecution cannot be required to co-operate in that way. A celebrated case—I cannot remember its name, but I am sure that the Minister's Department will be familiar with it—concerned the Inland Revenue's attempts to get hold of a tax lawyer's papers. The court held that that was a serious breach of legal professional privilege, and impinged on human rights.

Can the Minister clarify who is supposed to fall into the interesting category of persons with functions ``otherwise relating to crime'' who must co-operate with the director? Is the paragraph otiose—that is, unnecessary? If it is required, to whom does it refer?

Vera Baird (Labour, Redcar)

I want to raise a similar point with the Minister, in an entirely friendly way. The definition in subsection (1)(b) of persons who have functions ``otherwise related to crime'' appears at first sight to be wide enough to include judges as well as lawyers, solicitors and probation officers, who have a duty of confidentiality to their clients. There cannot be any difficulty in expecting those criminal justice professionals to co-operate in making the procedure work smoothly—that is part and parcel of their work within the courts structure.

However, it would be odd and misplaced to impose a statutory duty of co-operation on a judge, who will have to make findings of fact when the director says that a person has a criminal lifestyle and the person denies it. As the hon. Member for Beaconsfield (Mr. Grieve) said, legal professional privilege cannot be overborne by statute, and I do not imagine that the clause is an attempt to do so. That would oblige a person who had come across information in pursuit of his professional duties to disclose it because there was a conflict between that confidentiality and the statutory duty in subsection (1)(b). Probation officers frequently receive confidential information, and they have a professional duty not to disclose it, yet they may fall within the category of those who are intended to co-operate with the director. I am looking for an assurance that those problems have been considered and the category is not intended to include those people, because a conflict would be the inevitable result if it did.

David Wilshire (Conservative, Spelthorne)

I often find short clauses the most intriguing, because they can raise fundamental issues. Will the Under-Secretary tell us why the clause is necessary? In a sensible world, people would co-operate. I suspect that the penny has just dropped in Government circles that in the past there has not been the necessary co-operation for the conviction of criminals. I have in mind the issues that arose over the tracking down of terrorists or suspected terrorists in Northern Ireland, where a turf war, which required an intervention to knock heads together, broke out between the Metropolitan police and the security services.

Will the Under-Secretary confirm why the clause is included in the Bill? Is it here, like a piece of folklore, because it ought to be? Is it included because things are not what they should be? Is it here because when Ministers discussed their intentions for the Bill, they got wind that we might be heading for a rerun of that lack of co-operation between the various agencies? If that is the case, the Committee must be told, because it would be a serious matter. I do not raise the issue in a party political sense, as I imagine that it would unite members of the Committee. If the provision is concerned with people arguing about who does what, and saying, ``We're not going to talk to you,'' that is something on which we should take a view.

Having said why the clause is necessary, the Under-Secretary can help us by explaining what ``co-operation'' means, because it can mean all things to all people. If we are to avoid a return to the days of the turf war, when Customs and Excise did not want to talk to the Inland Revenue, the Inland Revenue did not want to talk to the police and the police did not want to talk to MI5, we must know what ``co-operation'' means. Will it be sufficient for someone to pick up the phone once in a while and say, ``How are things going?'' In order to avoid the problems of the past, will there be a clearly defined regime that states exactly what is expected?

In drafting the legislation, has anyone in Government or the parliamentary draftsman's office raised the issues involved with the various agencies? Has there been a pre-discussion? Can we be given a steer on how this will be received in the various independent fiefdoms that have not got on too well in the past?

The Under-Secretary may find it difficult to comment on this in detail, but in the list of bodies that must co-operate with the director—the director must also co-operate with them—there is no mention of the security services. I hope that that omission is intended to draw a veil over things, rather than an admission that the Government do not think that the security services will co-operate, or that they do not want them to co-operate. We must spell out that the fact we expect them to co-operate in same way as everyone else.

Bob Ainsworth (Labour, Coventry North East)

If the director is to be able do his job, he must establish good working relationships with law enforcement authorities and others whose remits overlap with his own. It is vital that all authorities involved in efforts to recover the proceeds of crime co-operate with each other and co-ordinate their activities. The clause achieves that by giving the director and other bodies a duty to co-operate with each other. Persons with investigative functions, prosecution functions or other functions relating to crime would have a duty to co-operate with the director in the exercise of his duties. Such persons would include, for example, police officers, officers of Customs and Excise, and members of the Crown Prosecution Service and the National Criminal Intelligence Service.

The Financial Services Authority will be obliged to co-operate, but only so far as it is involved in criminal investigations. The intent behind subsection (1)(b) was to make it certain that we encompassed all the people involved. It was never intended, nor should it ever be intended, that the clause encompass lawyers, judges or anyone else connected with crime. I recognise the potential for misunderstanding in the clause, and we must consider the wording to make it certain that it adequately covers all appropriate organisations—the intelligence services, the FSA, the National Criminal Intelligence Service and so on—while not drawing in others for which an obligation to co-operate with the director would be inappropriate.

The point is taken that we need to consider the ramifications of subsection (1)(b), so we shall do so and return to the subject. With that explanation, I ask that the clause stand part of the Bill.

Dominic Grieve (Conservative, Beaconsfield)

I am grateful to the Minister for his comments. I think that he understands my point of view. The hon. Member for Redcar (Vera Baird) also picked up on the same point. The problem is one of definition, and it should be possible to define subsection (1)(b) more closely so that there is no ambiguity. Therefore I shall not oppose the clause.

David Wilshire (Conservative, Spelthorne)

Did the Minister reply to any of the issues that I raised?

Bob Ainsworth (Labour, Coventry North East)

I beg the hon. Gentleman's pardon. I thought that the main issue that he raised was whether it was intended that the intelligence services be involved in the co-operation—the answer to which was yes. When he referred to the motivation behind the provision, I thought that he was merely making a point, but I shall give him an answer. There is always a propensity for organisations not to co-operate unless, from the top, they are obliged to do so. I do not think that the situation is anything like as bad as he makes out. None the less, there is always the possibility that people will not co-operate and form part of a team.

In preparation for the Bill, we secured the agreement of all the appropriate authorities to the asset recovery strategy, which will be introduced before the Bill. All the relevant people—the police, the prosecution services, NCIS, Customs and Excise, the lot—have agreed the strategy in principle in a joint effort to lift our game on the recovery of the proceeds of crime. In preparation for the powers in the Bill, we have made some effort to ensure a good working relationship between all the relevant people. We want to ensure that this aspect of fighting crime is given the priority that it deserves, which it has not been given in the past. The fact that the duty to co-operate with the director, and the director's duty to co-operate with others, is stated in statute will help. There is no preconceived idea about a particular problem in the formulation of the Bill.

Alistair Carmichael (Liberal Democrat, Orkney and Shetland)

Will the Minister assure us that subsection (2) will not involve evidence acquired in the course of the preparation for civil proceedings being passed to the authorities that prosecute for crime? It is arguable that the prosecution authorities would still be exercising their function under the Bill, and as such they could be in a position to impose a duty of co-operation on the recovery agency.

Bob Ainsworth (Labour, Coventry North East)

Another part of the Bill ring-fences information gained by the director under his taxation functions. For the purposes of taxing the proceeds of crime, the director of the agency may have control of someone's tax records, but we do not want them to be passed to the Inland Revenue, as it would expand the Revenue's investigation powers by default. Contained within the Bill are precautions to make certain that that does not happen. However, with regard to other information that comes within his knowledge, the director will have to co-operate with other organisations; he will be obliged to share the information with them. Notwithstanding that, people have the right in law not to incriminate themselves. The right not to incriminate oneself is protected. I hope that I have covered the point raised by the hon. Gentleman.

Alistair Carmichael (Liberal Democrat, Orkney and Shetland)

May I press the Minister on that point? It seems to me that an important distinction should be made. The Bill gives draconian powers of recovery and disclosure to the director, and to the Lord Advocate in Scotland, in relation to the obtaining of information. I am less uncomfortable than I might otherwise be in giving the director and the Lord Advocate those powers because the information obtained under them is to be used in the pursuit of civil proceedings rather than criminal proceedings. In the latter case, defendants have a right to silence and need not incriminate themselves—

Roger Gale (Conservative, North Thanet)

Order. We had better establish the principle now that interventions should be interventions, and not speeches.

Bob Ainsworth (Labour, Coventry North East)

We do not want to create artificial barriers to the transfer of information that it is right and appropriate to transfer. We are therefore trying to provide gateways to facilitate co-operation between law enforcement agencies and allow the passage of information between them. Equally—I think that this is the point that the hon. Gentleman sought to make—if someone faces criminal proceedings, information that they might have been obliged to disclose, but which would incriminate them in connection with the proceedings being taken against them, cannot be used and should not be used. That right is protected in the Bill.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

May I pursue a point with the Minister? I am slightly concerned about the creation of loopholes. Is the Minister telling us that if, during an investigation of financial matters, the investigator—we have just agreed that he should be trained—trips over a body and discovers that Colonel Mustard has been done in with a metal pipe in the drawing room, that information cannot be used by anyone else in any other case? Earlier, in connection with the relationship between Scotland and England, I raised the question of information that had been collected falling down the cracks. We do not want that to happen here. Surely if evidence of crime is discovered, it ought to be available for use by whoever collects it, or passed on to those with whom they co-operate.

When we were speaking about the phrase ``otherwise relating to crime'', a strong point was made about lawyers and professional privilege. I understand that, but will the Minister clarify whether members of that august body the British Bankers Association will similarly be expected to co-operate? Will accountants, too, be expected to co-operate? We have already dealt with the idea of spies. Will Benefits Agency staff be expected to co-operate in matters pertaining to the issues that we are concerned with?

Bob Ainsworth (Labour, Coventry North East)

Under clause 4 there is no statutory duty for anyone other than such people as I have mentioned to co-operate with the agency. Other provisions in the Bill, as my hon. Friend will see, place duties of disclosure on the appropriate financial institutions so that people can be investigated. That is different from what we are considering now, which is the obligation on the relevant prosecuting and investigating authorities to co-operate with the director, who will also be obliged to co-operate with them. That is essential if we are to implement the Bill as Parliament would want, and secure the precedence of the pursuit of criminal investigation over the pursuit of the proceeds of crime.

If the director wants to commence or recommence a case with respect to civil recovery, he will have to check with the appropriate authorities that that will not cut across criminal proceedings being taken against relevant individuals. If he is not given such a duty, the methodology arrived at to protect the primacy of the pursuit of criminal investigation, and to establish a hierarchy of powers to be used by the agency, will not be effective. Financial institutions and the banking sector are not relevant in the present context, although later provisions deal with duties of disclosure and the power to oblige people to make disclosures to the director.

Norman Baker (Liberal Democrat, Lewes)

Material gained from the interception of communications is, of course, covered by statute, and information obtained by MI5 or special branch would normally be reserved for their eyes only. Is it expected that under the clause, that information would be made available to the director?

Bob Ainsworth (Labour, Coventry North East)

None of the duties to co-operate and to disclose information cut across the Data Protection Act 1998 or the Regulation of Investigatory Powers Act 2000. Stipulations in those Acts will stand, and there will be no duty on anyone to disclose information outwith the regulations. My hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) seemed to be accusing me of being soft on the proceeds of crime, but we do not want to prevent the passage of information. There are legitimate concerns, and there would be grave concern if we allowed information gained by the director to be passed on and used by the Revenue. However, with that exception, we want to allow the free flow of information between the various agencies involved.

We need to protect the right in law against self-incrimination. Therefore, information gained in civil proceedings under the obligation to co-operate with and make disclosures to the director will not be admissible in subsequent prosecutions in connection with which using it would amount, effectively, to obliging someone to incriminate themselves. That is the only protection, and it would kick in at the point when a person went to court. It would not prevent the passage of information between the various agencies, but would protect the defendant and would make certain that existing rights applying in those circumstances were not eroded.

Norman Baker (Liberal Democrat, Lewes)

Information obtained from a telephone tap might influence the activities of the security services without being admissible in a court action, because of the way in which it was obtained. Would that information be available to the director for civil cases?

Bob Ainsworth (Labour, Coventry North East)

Organisations will be obliged to co-operate with the director. They will not be allowed to cut across the regulations imposed under the Regulation of Investigatory Powers Act. In passing information to the director, they will be able to include stipulations about how that information can be used, and about its further disclosure. That is necessary in such situations. I hope that satisfies the hon. Gentleman but he is looking rather puzzled, as if it does not.

Ian Davidson (Labour/Co-operative, Glasgow Pollok)

Is that not an argument for people getting their confessions in first, on civil proceedings matters, and then arguing that they cannot then be used against them for criminal prosecutions?

Bob Ainsworth (Labour, Coventry North East)

That situation is most unlikely to arise because, as we have already established, the main priority will be the prosecution of criminals under the law. Where a prosecution is being conducted, confiscation attached to that prosecution will be the main means by which we pursue the proceeds of crime. In the overwhelming majority of cases civil recovery or the taxation powers will be used only when, for whatever reason, prosecution is not available and is not likely to become available. If we get the co-operation right and the director is fully aware of the intentions of the prosecuting authorities, it is not likely that he will pursue anybody for civil recovery who is likely to be put in front of a court of law and pursued for some criminal activity. We want to operate a hierarchy so that we bear down on crime and are as effective as possible in reducing it.

As for the point made by the hon. Member for Lewes (Norman Baker), intercept material gained under part I of the Regulation of Investigatory Powers Act 2000 will not be disclosable. I do not know whether that information satisfies him.

Norman Baker (Liberal Democrat, Lewes)

Although I am grateful for the Minister's clear answer on that piece of legislation, it does not cover the wider issue, which we need to understand. For example, there is the question of communications data that is available to the police service without a warrant having been issued or being necessary, such as telephone numbers dialled, and the frequency and length of phone calls. Will such data be available to the director or not? I am trying to establish how far the co-operation can go, and what the legislative limits are that will prevent information from being disclosed across the boundaries.

Bob Ainsworth (Labour, Coventry North East)

I am not sure that I can satisfy the hon. Gentleman, apart from repeating what I have already said. The protections built in to Acts such as the Data Protection Act and the Regulation of Investigatory Powers Act continue to apply, and will prevent the disclosure of information to the agency. Where those protections do not apply, organisations such as the National Crime Squad and the National Criminal Intelligence Service will be expected to co-operate with the agency and vice versa. I do not see a big problem with that, and I do not know how I can further satisfy the hon. Gentleman that there is no problem.

Question put and agreed to.

Clause 4 ordered to stand part of the Bill.

Roger Gale (Conservative, North Thanet)

Before we proceed, it was probably discourteous of me not to have realised before that some members of the Committee may not have served on a Committee on a major Bill before—or even on any Standing Committee at all. We should therefore lay down a few ground rules about what is permitted and what is not, as we are likely to be considering the Bill for a considerable period.

Messages passed between Ministers and civil servants must go through the Parliamentary Private Secretary. The issues are complex, and I appreciate that all hon. Members may from time to time require information or assistance from outside bodies. I would like therefore to say to those on the Back Benches that Members receiving information from people beyond the Bar of the Committee Room should do so outside the Room. It is not permissible to hand messages across the Bar to Members in the Room.

If Members wish to have private conversations, other than the occasional necessary word, I should be grateful if they would use the Green Benches outside the Room so to do. I will always permit reasonable interventions, but interventions must not take the form of speeches. The opportunity is almost always there to catch the Chairman's eye and make a full speech if that is required. Ordinarily—this does not apply to stand part debates, but certainly applies to debates on amendments—once the mover of the amendment has wound up the debate on that amendment, the Chairman is unlikely to accept any further interventions.

Clause 5 - Advice and assistance

Dominic Grieve (Conservative, Beaconsfield)

I beg to move amendment No. 5, in page 3, line 7, leave out `must' and insert `may'.

The amendment is a probing one, and follows along the lines of the discussion that we have already had, but that does not make it any less important. The clause provides that

``The Director must give the Secretary of State advice and assistance which he reasonably requires and which —

(a) relate to matters connected with the operation of this Act, and

(b) are designed to help the Secretary of State to exercise his functions so as to reduce crime.''

What is the purpose of this? I suppose it will be said that it puts on a statutory footing the duty of the director to report to the Secretary of State and tell him about the way in which his Department or agency is working and how the Act is operating, and, if necessary, to make suggestions about how the Act might be amended or improved if the Secretary of State were minded to do that. If that is the case, I will be the first to accept that the clause is innocuous, although its mandatory nature is perhaps surprising. After discussing the matter with my hon. Friend the Member for Surrey Heath (Mr. Hawkins), who took the debate on the previous mandatory requirement under clause 3, I am surprised at the need for the mandatory footing. It appears to emphasise the subservience of the director to the will of the Home Secretary, which is odd in view of the director's functions, which we discussed under clause 1. The director has to exercise a function akin to that of the Director of Public Prosecutions.

On this clause, however, things go further. Read as it stands, it appears to give the Secretary of State power to require the director to give him the sort of information that the DPP would never be minded to give the Home Secretary—detailed information that the director has obtained in confidence relating to the investigation of offences. That is why we seek to substitute ``may'' for ``must'', although I am the first to accept that it may be possible to approach the issue in other ways.

I seek reassurance from the Minister about what is intended, because when the intention is clear, it often becomes much clearer what alternative wording might achieve the same effect. We might word the clause without introducing the potential mischief of effectively requiring the director, if he were so bidden by the Home Secretary, to provide him with every piece of information to which he has access. I accept that the clause includes the word ``reasonably''—but on the whole, when Home Secretaries say that something is reasonable their underlings, including directors of independent agencies, tend to jump to it. I am not convinced that the word ``reasonably'' is sufficient protection in those circumstances.

Will the Minister explain exactly what is intended? With that, we may pause for a moment and consider, as the Minister helpfully did under clause 3, whether the wording is much wider than is necessary to achieve its object.

Bob Ainsworth (Labour, Coventry North East)

The amendment would mean that the director would not be required to give the Secretary of State

``advice and assistance which he reasonably requires''

relating to the operation of the legislation and the reduction of crime. As drafted, the clause enables the Secretary of State to take advantage of the director's expertise and seek his advice and assistance when it is reasonable for him to do so. The clause sets out the circumstances in which such advice and assistance may be required and makes it clear that advice and assistance must be on matters connected with the operation of the Act. It also makes it clear that, within that limitation, advice and assistance should be designed to help the Secretary of State in the exercise of his function of reducing crime. The director will not be the only source of advice on the legislation, but he will be a key source on certain aspects that are solely within the remit of the director. The operation of civil recovery in England, Wales and Northern Ireland is an obvious area in which the director will have the expertise to advise the Home Secretary.

In addition, the director might, at the request of the Secretary of State, want to propose amendments to the Government's asset recovery strategy and the targets for recovering the proceeds of crime. Those would be considered by the assets recovery committee and submitted to the Home Secretary for approval. We want the director to discuss any proposed amendments covering his function and that of other members of the assets recovery committee with members of the committee. The director may also wish to give advice and assistance concerning money laundering, although he has no specific function in that area. The clause will enable him to do that if requested by the Secretary of State.

The clause will contribute to the overall goal of reducing crime by improving the recovery of assets that derive from unlawful activity. It will ensure that the director is able to play a full role in contributing to the Government's overall crime reduction targets by providing valuable assistance and advice to the Secretary of State.

Nick Hawkins (Conservative, Surrey Heath)

The Opposition understand exactly what the Minister is setting out from his brief, but can he tell us whether the Government and those who advise them have turned their minds to the parallel nature of the role of the director of the Assets Recovery Agency and that of the DPP? That is the nub of the issue that concerns my hon. Friend and me.

Bob Ainsworth (Labour, Coventry North East)

When considering the regulations, we did not try to invent the wheel from scratch. Our proposals are similar to the requirement placed on the director-general of the National Criminal Intelligence Service and the National Crime Squad under the Police Act 1997 to submit reports to the Secretary of State on matters connected with the activities of those organisations.

The clarification in the clause concerning what aspects the advice covers relates to matters connected with the operation of the legislation, and is designed to help the Secretary of State to exercise his functions to reduce crime. That is not to say that the director is under any obligation to disclose operational matters to the Secretary of State.

Dominic Grieve (Conservative, Beaconsfield)

It is useful to have ascertained the derivation of the provision, because it seems that what we are setting up in the Bill is different from NCIS. NCIS is an intelligence agency that collates material, whereas the Bill sets up an enforcement body with the power to do nasty things to people. NCIS does not have that power. The parliamentary draftsman has failed to appreciate the role of the director and the agency as an enforcement authority with a duty of confidentiality.

Bob Ainsworth (Labour, Coventry North East)

The director of the agency will not have a duty to disclose to the Secretary of State confidential information gained by him in the course of his investigations. That is clear, and the clause sets out the matters on which the director must advise the Secretary of State. They are matters relating to the operation of the legislation and the exercise of the Secretary of State's function of reducing crime.

Dominic Grieve (Conservative, Beaconsfield)

Following up the point made by my hon. Friend the Member for Beaconsfield, it seems to me that it might help the Minister and his officials to consider an historical parallel. Our concerns might be related to the battles that took place between John F. Kennedy and J. Edgar Hoover. We are talking about a director perhaps being asked by a hypothetical future Home Secretary to disclose matters that we objectively might not consider proper. That is where we make the comparison. As my hon. Friend said, the role of the director will be much closer to that of the DPP than to the directors of NCS or NCIS. I hope that the Minister will reflect further on that and perhaps return to the matter.

Bob Ainsworth (Labour, Coventry North East)

I think that there is some sort of a clash between us about how the director of the agency should be viewed. The hon. Gentleman insists on describing the director as a prosecuting authority, but he will not prosecute individuals in criminal law. The functions of the agency will be to recover the proceeds of crime. I shall reflect on the points raised by the hon. Gentleman, but the position is clear: the Secretary of State will be advised on the operation of the legislation and issues affecting his duty and role in the reduction of crime; that will not involve the disclosure of confidential information or operational matters that it would be wholly unreasonable for the director to disclose. The director will be under no obligation whatever to do that.

Dominic Grieve (Conservative, Beaconsfield)

I am grateful for the Minister's assurance that he will reflect on the matter. It is worth reiterating the problem. The Minister has said that the director and the agency will not have a prosecuting function. I accept that, but it is an exercise in semantics when one considers that the consequence of the agency's operation could be the civil bankruptcy of an individual and the seizure of his entire assets. The publicity attendant upon that--the proceedings will take place in open court--the fact that the proceedings will be instituted on the grounds that he is living on the proceeds of crime or has criminally acquired assets, all tested on the balance of probability, means that that person will be ruined. He may not have a conviction recorded against him, but he will have been hauled through hoops and over hot coals, and left destitute at the end—perhaps justifiably—without assets and having been identified as a malefactor. That is a large burden on the agency, and I reiterate my view and that of my hon. Friends that we should approach the matter on the basis that it is a quasi-criminal jurisdiction, because that is what it is.

That said, I accept the Minister's point and I am grateful that he will reconsider the matter. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 ordered to stand part of the Bill.

Further consideration adjourned.--[Mrs. McGuire.]

Adjourned accordingly at eighteen minutes past Five o'clock till Thursday 15 November at five minutes to Nine o'clock.