James Brokenshire
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(12 years, 6 months ago)
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The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
I beg to move,
That this House takes note of European Union Document No. 7641/12 and Addenda 1 and 2, a draft Directive of the European Parliament and of the Council on the freezing and confiscation of proceeds of crime in the European Union; and supports the Government’s intention to not opt-in under Protocol (No. 21) to the European Union Treaties at this stage.
I welcome the opportunity to debate this important draft directive in the House this evening, but I should say at the outset that I am sorry that it has had to be scheduled on a day when a number of members of the European Scrutiny Committee cannot be present. It was originally scheduled for 23 May, but it was necessary to move it in order to give more time to consider fully the views of operational partners before deciding whether or not to opt in. Given the weight of parliamentary business and the limited time available before the opt-in deadline, it was not possible to find a time for this debate when members of the European Scrutiny Committee had returned from their pre-presidency visit to Cyprus. That is not as I would have wished, and I have offered to meet the Committee Chairman, my hon. Friend the Member for Stone (Mr Cash), to discuss the directive.
I also recognise that, in order to inform these debates, we must ensure that the House is informed at an earlier stage of the Government’s position on such directives. I have written to the European Scrutiny Committee Chair to underline the high priority that I attach to ensuring that this process and these debates provide more effective scrutiny, and my officials will work with the Clerk of the European Scrutiny Committee and with the European Union Committee in the other place to that end. I am also arranging a discussion with the Minister for Europe to consider how the matter might be addressed effectively.
On the subject of the motion, asset recovery is a hugely important weapon in our efforts to tackle organised crime. The proceeds of crime are not only a central motivation for organised criminals; they fund further criminality. Freezing and confiscating criminal finances hurts organised criminals and protects the public, and I have no doubt that right hon. and hon. Members on both sides of the House will have examples of when the use of asset recovery has been a very effective weapon in providing relief to communities from serious organised criminals. It is an effective means of tackling and putting increased pressure on organised crime groups.
Keith Vaz (Leicester East) (Lab)
The Minister is absolutely right, but we must do much better, and the better way is to make sure that there is more co-operation between EU countries on ensuring that those who try to find a safe haven for their money in another EU country are caught and their money confiscated as quickly as possible.
James Brokenshire
The right hon. Gentleman, the Chairman of the Home Affairs Committee, makes an important point about international co-operation—one that we certainly recognised in the organised crime strategy that was published last summer. Criminals may wish to hide or to secrete assets not only in the EU, but throughout the world, so the need to look at the matter in an international context is an important one to which I shall return during my contribution.
In our domestic legislation, we have taken some important steps forward. The Proceeds of Crime Act 2002 is the principal piece of domestic legislation for the restraint and confiscation of the proceeds of crime. It is an advanced and powerful piece of legislation that in most areas goes beyond the minimum standards of the directive that we are debating this evening. It provides a single scheme for the confiscation of the value of the proceeds of crime, following any criminal conviction and regardless of the amount.
If a defendant has been convicted of a listed serious offence or has a number of convictions, the court can assume that all their property is the proceeds of crime and can be factored into the amount of a confiscation order, a power known internationally as “extended confiscation”. It allows for the confiscation of assets that have been transferred to family members or other third parties; it enables the freezing of assets by a court from the beginning of an investigation in order to prevent their dissipation; and it provides civil recovery powers, an intrinsic part of our approach to this area of law, whereby the focus is on the property, not on the person who holds it, and no conviction is required. That is a particularly useful tool for tackling high-level organised criminals for whom it is hard to obtain a conviction.
In 2010-11 UK law enforcement agencies froze or recovered more than £1 billion of criminal assets. The amount of assets recovered has increased year on year since the 2002 Act, and one of this Government’s first steps on entering office was to do away with some of the arbitrary targets that the previous Government imposed on law enforcement professionals. This has galvanised their professionalism and their approach to ensuring that more assets are recovered or frozen. Certainly, the UK is recognised as a leader in this field. However, the Government want to do more, particularly on international asset recovery, as we made clear in our organised crime strategy of July 2011.
In 2008, it was estimated that some £560 million-worth of UK criminal assets were held abroad. That underlines the level of sophistication that a number of organised crime groups are seeking to deploy in order to hide or to shield assets. Improved international co-operation is therefore a necessary step towards recovering that money. That is why we welcome the aims of the directive, if not some of its provisions. It is right that we seek to drive up standards throughout the EU and find better ways of working together with our EU partners. To that end, the directive covers confiscation following a criminal conviction, extended confiscation, third-party confiscation, non-conviction-based confiscation, and powers to freeze assets. The UK already has all those powers under the Proceeds of Crime Act, and so, in almost all areas, we exceed the minimum standards established by the directive.
The purpose of the directive is to require member states to be able to freeze and confiscate the proceeds of cross-border serious and organised crime. The Commission argues that the confiscation of the proceeds of crime in the EU is under-utilised despite the existing EU legal framework. It says that there are three problems with the current EU legal framework: its incomplete or late transition into domestic law, diverging national provisions that make mutual recognition more difficult, and the low utilisation of confiscation in practice. The directive therefore creates minimum standards for the freezing, management and confiscation of the proceeds of crime. The Commission intends that minimum standards will lead to greater co-operation, but a mutual recognition instrument has not yet been published.
It is vital that we get the detail right, and we must pay great attention to the effect of the directive on our existing domestic regime and its likely operational impact. In that regard, the Government have identified a serious problem with the directive. As drafted, it poses a very real threat to our domestic non-conviction-based confiscation regime. Operational partners have expressed concern that opting in at this stage poses a risk to the powers used by our law enforcement agencies to target and disrupt the most serious organised criminals. Our non-conviction-based confiscation powers are civil law measures that allow prosecution agencies to take action against property that they think has been acquired through unlawful activity. The action is not taken against an individual, and no criminal conviction is necessary. As I said, it is a particularly useful tool for tackling the high-level organised criminals against whom it is very difficult to achieve a criminal conviction.
In 2011-12, approximately £20 million-worth of criminal assets were recovered using non-conviction-based confiscation powers. It is important to note that the Proceeds of Crime Act, and the use of the civil standard of proof as structured within the Act, has been upheld by the Supreme Court, and therefore its operation has been subject to judicial scrutiny at the highest level. Because of its criminal law legal base, the directive risks placing non-conviction-based confiscation measures in the UK on to a criminal law footing, opening new avenues of legal challenge to our powers and, in many ways, undermining the court judgments that have been secured in relation to the operation of the Proceeds of Crime Act. If criminal law procedural protections and a criminal law standard of proof were introduced, our domestic regime would be severely weakened and our law enforcement agencies would find it harder to disrupt the workings of some of the most dangerous organised criminals.
This is a technical argument, but it is of great importance to the law enforcement agencies that protect our country from organised crime. Under qualified majority voting, there is no guarantee that we can secure the necessary changes to the text. This Government will not risk hindering the work of law enforcement agencies in tackling high-level criminality. The risk is simply too great.
Tom Brake (Carshalton and Wallington) (LD)
Is it not the case that non-conviction-based confiscation powers exist in many other EU countries and that the directive is therefore likely to be changed to increase flexibility and incorporate those powers, rather than to reduce it?
James Brokenshire
There is likely to be negotiation and discussion on the directive, as the right hon. Gentleman will know, given the manner in which such instruments are taken forward. However, given the significance of the existing powers and the way in which the regime has been tested before the courts, the key point is that because of the use of qualified majority voting, which I have mentioned, there is no guarantee that there will be the outcome that he suggests. The Government have taken the judgment that that risk is too high. On balance, we believe that not opting in at this stage is the better option. The risk to our civil recovery regime is simply too great, and I am not willing to take it, especially when operational partners have expressed such concern to us.
None the less, it is our intention to play an active part in the negotiation on the directive. Our experience on the recent human trafficking directive shows that the UK can have an influential voice, even when it does not opt in at the outset. In that case, we opted in to the directive at the post-adoption stage. The UK’s recognised experience and expertise in asset recovery will certainly help with the negotiations.
Our wider aim is to establish effective mutual recognition arrangements for both conviction-based and non-conviction-based confiscation orders. Although the draft directive adds nothing to our domestic asset recovery regime, mutual recognition arrangements could greatly improve our ability to recover the proceeds of crime held in other member states. The draft contains no proposal to establish an effective system for the mutual recognition of confiscation orders. Law enforcement partners say that they would welcome such proposals. The Government will consider how best to use our influence on that matter.
It is important to underline the comments of the Chair of the Home Affairs Committee on how mutual recognition can be a powerful tool. It is important to focus on that point. Indeed, the EU Select Committee in the other place has highlighted it as an issue with the directive and it needs careful attention.
Charlie Elphicke (Dover) (Con)
Is it not the case that there is bilateral mutual recognition in almost every case and that we do not necessarily need mutual recognition under the aegis of the European federal government in Brussels?
James Brokenshire
It is certainly true that bilateral arrangements can be structured. All that I am seeking to say is that negotiations on the directive provide the UK with an opportunity to have an influence. They do not affect our decision, reflected in the motion, not to opt in at this stage because of the serious risks and operational requirements that I have identified.
Jacob Rees-Mogg (North East Somerset) (Con)
I urge the Minister to be very cautious about mutual recognition, because it means that countries that do not have a legal system that is as robust as ours can have their orders enforced in this country. It therefore threatens the rights of British subjects.
James Brokenshire
I certainly hear my hon. Friend’s point, and we will monitor that carefully in relation to the directive. As I have indicated to the House, there is currently no proposal in the directive dealing with mutual recognition.
Mr David Hanson (Delyn) (Lab)
I hear what the Minister says, but I wish to clarify it. In another place’s proceedings on the matter only recently, on 22 May, Lord Henley, the Minister, said:
“The directive offers us a valuable opportunity to raise the standard of asset recovery legislation in the EU, enhance our co-operation with member states, and increase our powers to recover criminal assets held overseas.”—[Official Report, House of Lords, 22 May 2012; Vol. 737, c. 778.]
Why did the Minister in the Lords say that only two weeks ago, whereas the Under-Secretary is saying today that we are not going to opt in?
James Brokenshire
If the right hon. Gentleman reads the report, he will see that my noble Friend underlined clearly that the Government had not concluded their consideration of the directive at that point and had not formulated their decision on whether to opt in. We have listened carefully to the concerns expressed by law enforcement partners about civil recovery powers, and we have determined that the best course of action to protect our laws and our current civil recovery operation is not to opt in. I am surprised that the right hon. Gentleman seems to challenge that view. He seems to have determined that it would be appropriate to opt in.
James Brokenshire
If the right hon. Gentleman wants to take a different course, I am happy to give way to him.
Mr Hanson
I was simply looking at what was said only three weeks ago in another place and what the Minister is saying now. Given what he has said today, is he willing to publish in the Library at least some sort of précis of the responses that he has had from the agencies concerned, so that we can examine them in the light of the directive?
James Brokenshire
I am certainly happy to consider that, but the right hon. Gentleman will recognise that there are sometimes operational sensitivities attached to doing so. We have heard clear representations from operational law enforcement partners, which have been an important factor for the reasons that I have outlined. We none the less recognise that the UK would benefit from the directive raising standards across the EU regardless of whether we opted in, because of the developed legislation that we have in place in this country.
Not opting in at this stage is not a sign that we do not care about asset recovery. It is a sign that the UK takes it very seriously and is committed to getting legislation right for the UK and all member states. Our ultimate aim is to achieve better mutual recognition of both criminal and civil confiscation. The directive will not achieve that, and we will press for a further instrument or instruments in due course that would have that effect. We will analyse the directive carefully, but in the context of the current version, and for the reasons that I have explained, our clear judgment is that the UK should not opt in at this point.
Mr Hanson
Case proved, m’lud: the hon. Gentleman, along with the hon. Member for Rochester and Strood and others, does have concerns about this issue in principle. What I take from the Minister this evening is that the advice that he has received from operational organisations points to concerns about the ability of the measure to deliver what it should deliver, which is an increase in the assets taken from criminals and terrorists, and their repatriation to the United Kingdom. If that is the reason he is lukewarm this evening about progressing the measure, I will look at that in detail. If the reason is the pain and suffering that hon. Gentlemen such as the hon. Member for Rochester and Strood and others may bring upon him—because of their fundamental objections to further European co-operation on such matters—that is something that we will also revisit in due course. If the Minister can provide us with a timetable for further discussion and examination of the issues, and if he is saying that he will rule out for ever signing up to this—[Interruption.] If he would like to say that on the record, that would be helpful.
James Brokenshire
I say to the right hon. Gentleman that we do not rule anything in, and we do not rule anything out. It will depend on how the negotiations proceed. The EU itself will be leading the timetable, and the presidency will take that forward. I understand his desire for a timetable, but that is not within my gift.
Mr Hanson
I am afraid there has. The Minister has explained this evening the basis on which he has made his comments on the order. I will seek to obtain further information on that, as that would represent valuable progress. I suspect, however, that underneath all this there is a slight concern about the reaction of some Conservative Members, who will undoubtedly raise the concerns that I have mentioned, during the rest of the debate.
Jacob Rees-Mogg (North East Somerset) (Con)
I am grateful to have been called so early in the debate to represent the European Scrutiny Committee, replacing my hon. Friend the Member for Stone (Mr Cash), who is away. I apologise if, in comparison to him, I am more loquacious.
I want to start by raising a few points relating to scrutiny. The Minister was gracious in accepting that there had been problems with it. The document was first made available for an opt-in decision in the middle of March, with a three-month time scale for making a decision which ends on 15 June. It is a pity that Her Majesty’s Government could not have made up their mind on this matter slightly earlier in the process.
I also want to raise a point about the other place. The debate in this House was cancelled on the ground that we were unable to debate the matter until the Government had made up their mind, but in the same circumstances the other place was able to debate it. I am not entirely sure whether that is a discourtesy to the other place or to us, but it seems odd that such a rule should apply in one place and not the other.
James Brokenshire
Perhaps I can help my hon. Friend. There was a distinction, in that the debate in the other place was on an Opposition motion, rather than a Government motion.
Jacob Rees-Mogg
I am grateful for that clarification. I should also like to say, for future reference, that I have been given hope that the Government might occasionally listen to what the House says, and that having debates before a decision is finally made would not necessarily be a bad thing. It might be a pious hope that speeches made from these Benches might influence the wise thoughts of Her Majesty’s Government, but it is one that I hold to. I am grateful to the Minister for his explanation, but I hope that we can have better scheduled debates in future. From a personal point of view, I believe that the slot at the end of business on Wednesdays is extremely convenient for most people.
It is also a shame to be having this debate now, when half the members of the European Scrutiny Committee are away in, of all places, Europe. They are visiting Cyprus, in preparation for Cyprus taking over the European Union presidency. I was glad to have the opportunity of staying in the House. Like you, Mr Speaker, I prefer not to leave. I believe that you require specific permission to leave the country, and I would not mind being under the same constraint myself.
I shall move on to the substance of the opt-in decision, and to the Minister’s comments. It is tremendously important that, under our current law, any freezing order requires the order of a court, but that would not be the case under the proposed document from the European Union. It is unsatisfactory to allow the administrative freezing of assets without a court interfering. That is an important principle of justice, and on that basis alone it would be wise of the Government not to opt in to the directive.
As the Minister said, the directive would offer no direct benefit to our domestic asset recovery regime. That being the case, the only argument for opting in would be to have more Europe, and that is not the policy of Her Majesty’s Government, who are committed to keeping Europe closely under watch and limiting any extension of its powers. It is therefore difficult to see what changes to the draft directive the Government would find acceptable in order to make it better, or whether there is any prospect of their insisting that anything that happened under it should require a court order before being implemented. It would be interesting to know from the Minister what would be the consequences of our not opting in—by what would we be bound in our existing agreements and how would they develop, and what would be our ability to maintain bilateral arrangements with other member states in future? Might that not be a more suitable way of approaching the matter?
There are concerns about the standing of the directive under European constitutional law. As the Minister and other Members know, we have the ability to opt out of a great number of the crime and justice directives in 2014, but—and there is a but—if we signed this proposed directive, it would not be part of that block opt-out and it would remove our ability to opt out of three other directives that we have so far opted into. The block opt-out does not apply to EU policing and criminal justice legislation adopted following the Lisbon treaty’s entry and coming into force where the UK decides to become bound by it, and neither does it apply to pre-Lisbon treaty legislation that was amended once the Lisbon treaty came into effect. The three pieces of pre-Lisbon EU treaty legislation that we would lose are on money laundering, the identification, tracing, freezing, seizing and confiscation of instrumentalities and the proceeds of crime under the framework decision 2001/500/JHA on the same subject, and another framework decision on the confiscation of crime-related proceeds. We would thus be tightly binding ourselves into all our future confiscation and money laundering policies being determined at the European level.
Keith Vaz
Of course. A RABIT—rapid border intervention team—is a rapid deployment force used by the EU to go to countries that face influxes of migrants who are illegally trying to enter the European Union. It is not the furry thing that runs around the hon. Gentleman’s constituency.
When the Minister winds up—I will read his reply in Hansard, and I apologise, Mr Speaker, for not being here for the wind-ups—I hope that he will look at the issue of the new National Crime Agency to see whether any of this affects the way in which the NCA is going to deal with the mutual co-operation that exists between our agencies and other EU countries. I have mentioned the visit that the hon. Member for South Ribble and I made to Colombia. The one agency that was praised, from a front-line commander in the middle of the jungle that we visited to the President of Colombia, President Santos, was the Serious Organised Crime Agency. It was praised particularly for the way in which it has worked with the Colombians and with other Governments throughout the world to combat illegal drug activity.
James Brokenshire
As the right hon. Gentleman will not be here for the wind-ups let me say now that I will reflect on his comments. I am certainly very appreciative of and recognise the work that SOCA undertakes around the globe in a number of different regions. The development of the NCA, and certainly the utilisation of legislation on the proceeds of crime, will be part of our approach to strengthening and developing our response to organised crime. The NCA is one part of that.
Keith Vaz
I thank the Minister for that answer.
Finally, when we spend money on organisations such as SOCA, on which we spend £0.5 billion pounds a year, we expect value for money. We expect it to be able to go out there and seize assets. At the end of the day, that is how the public will judge the effectiveness of these organisations. Working with our European partners can only help us to achieve that. We do not need more legislation or, necessarily, more directives, but we do need the co-operation of our partners to succeed.
Mr Raab
I thank my hon. Friend for that. I think we saw a classic piece of fence-sitting. There is a clear contradiction in the position set out by the shadow Minister, which I shall refer to briefly in due course.
The second argument against opting in is, as the explanatory memorandum explains, that there has been no formal domestic consultation yet, so the House does not have the official and formal views, based on operational law enforcement experience, of the police, SOCA, the intelligence agencies and other departments, let alone external experts and groups, on the need for and the practicability of what is being proposed. The Government are therefore right to be cautious and not to be bounced into signing up to a broad new law with far-reaching implications that have not been properly thought through. I noted that the shadow Minister has explicitly requested some gist, explanation or consultation in respect of the nature, character and substance of those submissions, yet without having seen them, he would be happy to opt in anyway. I respectfully suggest to him that the ideological view in this debate and in this House is his, in favour of more JHA integration, irrespective of the scrutiny of the merits and the substance.
The third argument against opting in relates to the costs associated with this directive. Those remain unquantified, but they could well be substantial. The directive will require changes to UK primary legislation. It would introduce new data collection requirements, specifically for evaluation purposes at the EU level. Those would create a pointless administrative burden for UK authorities and lead to an additional bureaucratic tier of EU monitoring of our practices. In addition, as has been said and as the explanatory memorandum explains, the directive’s insistence on effective remedies could add to the legal aid bill, just as we are taking difficult decisions to reduce it which require uncomfortable sacrifices at home.
The fourth objection is that the UK already has ample powers in the area of asset confiscation and freezing. The Government’s explanatory memorandum states:
“We believe that the UK exceeds many of the minimum requirements and so we do not foresee that it would have an impact on the number of cases.”
If anything, those powers have become too broad in the post-9/11 era. The amount of money confiscated by the UK authorities rose by more than 500% between 2003 and 2009, which is scarcely the symptom of a weak regime. The reality is that the directive is neither necessary nor desirable.
Under the Proceeds of Crime Act 2002, the UK framework for dealing with the confiscation and freezing of assets is perfectly robust. Let us be honest about this—I think that the shadow Minister should be honest about it: by legislating on this matter in Brussels, we would be legislating for the failings of other EU member states whose regimes are criticised by the Commission as “underdeveloped and underutilised”. In other words, we are expected to sign up to this blunt EU directive to try to encourage other EU states to pull their socks up. That is not a satisfactory basis for legislation in this country. For one thing, most of the failings in other member states arise less from legislative defects and more from deficiencies in operational law enforcement capabilities. The statement from the Commission suggests that the problem is less one of legislation and more one of law enforcement.
The Home Office recognised that point in its explanatory memorandum, which states:
“The UK does not consider that non-legislative options have been fully considered”.
That is the fifth objection to opting in. If there are alternatives to legislation, why have they not been thoroughly and properly examined by the Commission before it rushed to churn out yet another intrusive and in certain respects draconian directive?
The final objection is the impact on the UK’s 2014 opt-out decision on crime and policing, which has already been mentioned. Every time the UK opts in to one of the 130 or so measures that are subject to our block opt-out, that measure is removed from the list of laws that the UK will have the chance to repatriate by 2014. In other words, if we opt in we will automatically become subject to the jurisdiction and interpretation of the Commission and European Court of Justice. Given that Brussels will be assuming competence over broad and, for the UK, unprecedented security powers, that is not an ideological issue but a major constitutional one.
The directive is in part draconian, but it is in whole costly and unnecessary. It conflicts with basic principles of British justice and would undermine Britain’s opportunity to wrest back democratic control of justice and home affairs legislation. There is no good reason why Britain should opt in—the Opposition have not advanced one—and for principled and practical reasons, we should remain out. I commend the Home Secretary and the Minister for their rigour in reaching this decision based on the substance and merits of the matter.
James Brokenshire
Thank you, Mr Speaker, and I will be brief given the late hour. I thank right hon. and hon. Members for their contributions tonight and I think that the debate shows the importance not just of the subject matter but of debating such decisions in the House to allow a full exploration of all the issues before a final decision is made.
In response to my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) and the hon. Member for Llanelli (Nia Griffith), who are members of the European Scrutiny Committee, let me underline the comments I made at the outset. The Minister for Europe is alongside me on the Treasury Bench tonight and we will work with the Committee and consider ways in which we can seek to ensure that Government decisions are communicated to the Committee and the House in advance of such debates so that we can facilitate further scrutiny and examination of the matters before us. I give the House a commitment that we will take that forward after this evening’s debate.
On the issue of mutual recognition, it may be of assistance if I say that the UK already succeeds in recovering assets from member states and other countries outside the EU in the absence of a directive. Some of that co-operation is a result of working through an existing mutual legal assistance framework on criminal matters that exists independently of and will not be affected by the directive. As I have said, the directive does not and is not intended to contain any further mutual legal assistance measures. However, as I said, we will explore the options for new mutual recognition for both conviction and non-conviction-based confiscation as these measures have the potential greatly to improve our ability to recover the proceeds of crime held in other member states.
I certainly recognise the emphasis on practical co-operation—a point that was made by my hon. Friend the Member for Esher and Walton (Mr Raab) and by the Chair of the Select Committee. Practical co-operation is a very important aspect, which I underline in my discussions with other EU members in relation to this subject matter.
I can tell my right hon. Friend the Member for Carshalton and Wallington (Tom Brake) that I have stated clearly in my letter to the European Scrutiny Committee that irrespective of whether the UK opts in to the directive, we will take an active part in negotiating the directive to shape it in the national interest. In response to the Opposition Front-Bench spokesman, the right hon. Member for Delyn (Mr Hanson), may I say that we have set out in our letter to the Select Committee our negotiation objectives? I will consider ways in which we may be able to share information with him on that and in relation to the representations that we have received from law enforcement partners in connection with the directive.
Ultimately, the risks posed to our domestic non-conviction-based confiscation powers are too great. We will seek to negotiate the directive into a more acceptable form and we will keep the progress of those negotiations under close consideration. We believe that the right approach is not to opt in at this stage, but to stay out and negotiate, to underline the need for continued focus on our international relationships in respect of asset recovery and to ensure that we have a robust system to monitor this. If necessary, I shall come back to the House in the future, should the situation change. At this stage we do not judge that opting in is in the best interests of our country.
Question put and agreed to.
Resolved,
That this House takes note of European Union Document No. 7641/12 and Addenda 1 and 2, a draft Directive of the European Parliament and of the Council on the freezing and confiscation of proceeds of crime in the European Union; and supports the Government’s intention to not opt-in under Protocol (No. 21) to the European Union Treaties at this stage.