Public Accounts Committee Puts Confiscation Regime Under the Spotlight (Updated)

The Public Accounts Committee heard evidence from key Government personnel on the 15th of January 2014.

The National Audit Office has criticized the Government’s implementation of its policy to deny criminals the proceeds of their crimes by confiscating their assets.

According to today’s report to Parliament, government has no overall coherent strategy for confiscation orders and this fundamentally undermines the process for confiscating assets. Decision-makers across the criminal justice system, such as senior police officers, are often not prioritizing confiscation. In 2012-13, 673,000 offenders were convicted of a crime, many of which had a financial element, yet only 6,400 confiscation orders were set.

The annual amount of fraud perpetrated by criminals in England and Wales has been estimated by the National Fraud Authority as some £52 billion. On this basis, it has been further estimated that, out of every £100 generated by the criminal economy, £99.65 was kept by the perpetrators.

Without the government knowing what constitutes the overall success of its policy, the bodies involved have no way of knowing which criminals or court cases should be prioritized for confiscation activity. Today’s report also found that appropriate action was not taken early enough in many cases and this, together with out-of-date ICT systems, data errors and poor joint working, hampers the efficiency and effectiveness of enforcing confiscation orders. Forty-five hours a week are taken by HM Courts and Tribunals Service’s regional confiscation units just to enter information manually into multiple systems. There are also numerous data errors, particularly in inputting information after court hearings.

The NAO found that, throughout the criminal justice system, there is insufficient awareness of the proceeds of crime and its potential impact. Confiscation orders have a low profile within law enforcement agencies, with low awareness of financial legislation outside specialist teams. This results in many cases not being considered for confiscation.

HM Courts and Tribunals Service, supported by the Crown Prosecution Service and the Serious Fraud Office, works hard to enforce confiscation orders. But, owing to a lack of data and agreed success criteria, it is impossible to make meaningful cost-benefit assessments of the enforcement of different orders. The Courts and Tribunals Service successfully collects 90 per cent of its orders under £1,000, but it is not clear whether this activity on lower-value orders is cost-effective, or whether resources should be redirected towards enforcing higher-value orders.

Where confiscation orders are made and not paid, the main sanctions do not work. Sanctions include default prison sentences of up to 10 years and additional eight per cent interest on the amount owed. The Courts and Tribunals Service found, however, that in 2012, only two per cent of offenders paid in full once the sentence was imposed.

“The use of confiscation orders to deny criminals the proceeds of their crimes is not proving to be value for money. The government has not specified a target but only about 26p in every £100 of criminal proceeds was actually confiscated in 2012-13. The fundamental problem is a lack of strategic direction and agreement on what level of confiscation would constitute success. This is compounded by poor information, lack of knowledge, outdated IT systems, data errors and ineffective sanctions. There is a sharp need for a coherent and joined-up cross-government strategy. At the moment this activity cannot be seen as value for money nor as a credible deterrent to crime.”

Amyas Morse, head of the National Audit Office, 17 December 2013

The report can be found here

Peter Handcock CBE, Chief Executive, Her Majesty's Court and Tribunal Service, Ministry of Justice, Alison Saunders, Director of Public Prosecutions, Crown Prosecution Service, Ministry of Justice, Keith Bristow, Director-General, National Crime Agency and Mark Sedwill, Permanent Secretary, Home Office were called to give evidence before the committee.

Some of the PAC's comments have been reported by BBC Radio 4 Reporter Tom Bateman @tombateman

Listen to Tom's Report here:

Interested parties are invited to consider Mitchell, Taylor and Talbot (authored by members of Chambers) where the NCA, SOCA and AR strategy is discussed in some detail:

“The NCA states that it will recover illicit profits from organised criminals, or deny them access to their money and property. As part of its overall resources the NCA has access to a civil recovery and tax assessment capability under the PCA 2002. The FCA’s Economic Crime Command has been charged with tackling economic crime, including fraud. It will also take the lead in tackling the economics of organised crime, including “investigating and clawing back criminal assets in support of the NCA and its partners”. It is of note that although the NCA is a successor to the ARA the removal of the proceeds of crime is not listed in the Annual Plan as one of its overall operational priorities.

The Serious and Organised Crime Strategy

"Under the same heading ‘Pursue’, HOSSOCS sets out the Home Office’s intention to amend the PCA 2002 to address weaknesses perceived to exist in the confiscation scheme.  HOSSOCS states that legislation will be introduced to create new powers to seize criminal assets and “better tackle people who support and benefit from participating in serious and organised crime”.  Amending legislation will also be introduced “as Parliamentary time allows” to prevent criminals frustrating the making and enforcement of confiscation orders by such means as failing to appear at confiscation hearings post conviction, the bringing of third party claims that reduce the amount of money that is available for recovery and failing to pay orders after serving a default prison sentence, knowing that at present “the option of prison can only be used once”.  With regard to the latter HOSSOCS states that legislation address the situation by “substantially strengthening” default prison sentences.

Further HOSSOCS proposals include enabling assets to be frozen more easily and at an earlier stage in investigations; “significantly reducing” the time to pay confiscation orders; making investigative powers available to trace assets after the making of a confiscation order; removing the requirement for a consent form to be signed before assets can be realised “so as to reduce delays to the proceedings”, and introducing tighter travel and bail restrictions."

The Asset Recovery Strategy

"Quite where all these changes and new proposals leave the 2001 Asset Recovery Strategy is unclear: it is not referred to in either the NRA Annual Plan or HOSSOCS.

In May 2007 the Home Office issued a consultation document in relation to a proposed Asset Recovery Action Plan. [1]  This led to the creation of a ‘recovery of criminal assets’ target of £250 million for the financial year 2009-10.  In its consultation document the Home Office stated, “This is not just an aspiration – we have a robust plan and believe we can achieve it”.  The target was enshrined as Priority Action number 5 in the Government’s October 2007 Public Service Agreement, “PSA Delivery Agreement 24: Deliver a more effective, transparent and responsive Criminal Justice System for victims and the public”.[2]  An interim target of £155 million was set for the year 2007-8.

In March 2010 the Chief Inspectors of Her Majesty’s Crown Prosecution Service Inspectorate, Her Majesty’s Inspectorate of Constabulary and Her Majesty’s Inspectorate of Court Administration issued a joint report into the handling of cases involving asset recovery under the Act.  It considered the Government’s track record in achieving the national asset recovery targets.  It should be noted that as well as confiscation orders, criminal assets recouped from civil recovery and cash forfeiture count towards the target.  The report noted, “Performance nationally has risen considerably since 2001-02, when £25m was recovered, to £135m in 2007-08. However, this was below the trajectory of £155m, and it is unlikely that the 2009-10 target will be met”.  Precise figures are hard to come by but it would appear that the target was not met (the two may or may not be related).  As at October 2012 it would appear that only £154 million was ‘recovered’ [3] and that no new targets seem to have been set.  HOSSOCS claims that the Home are “are currently using powers under the PCA 2002 to recover over £150 million of criminal profits each year and to deny criminals access to even larger amounts (£500 million in 2012/13)”.  No reference is provided to the source of these figures.  However the HOSSOCS claim to recovering over £150million “each year” does not sit comfortably with the findings of the 2010 Chief Inspectors Report.

It would appear that no asset recovery strategy or target has been set by or for the NCA.  On this evidence it is suggested that one conclusion available to observers is that the Asset Recovery Strategy is now defunct, its goals unrealised.”