Crime and Courts Bill [HL]

Lord Ahmad of Wimbledon Excerpts

Monday 10th December 2012 Lords Chamber

[Lord Rosser]

My Lords, briefly, we await with interest the Government’s response. Certainly, the amendment would appear to fill in a gap in this part of the Bill, since one’s understanding of restorative justice was that it was at least as important, if not more important, for the victim as it was for the offender. Yet while the relevant clause provides for participating,

“in an activity … where the participants consist of … the offender and one or more of the victims”,

it then goes on to say,

“which aims to maximise the offender’s awareness of the impact of the offending concerned on the victims”.

It would appear as though the view in this part of the Bill is that the offender’s needs and awareness are regarded as rather more important than those of the victim or victims. I conclude by saying that my understanding of restorative justice is that it is there for the benefit of the victims at least as much as, if not more than, that of offenders.

[Lord Ahmad of Wimbledon]

My Lords, I welcome the enthusiasm and support for restorative justice from across the House. Indeed, at the recommital stage of the Bill my noble friend Lady Linklater moved an amendment in relation to pre-sentence restorative justice. That amendment added an explicit reference to restorative justice meeting the needs of the victim.

Her Majesty’s Government entirely agree that RJ, when used appropriately, can be an extremely positive experience for victims. For example, our own research has shown that 85% of victims participating in direct RJ conferencing with their offenders were satisfied. We therefore gave an undertaking to consider the amendment in advance of Report. I assure the House that we are fully supportive of the intention behind the amendment. We consider that the phrase,

“meet the needs of the victim”,

needs more explicitly to reflect the benefits provided by restorative justice. Victims may have many needs as a result of a crime, and we should be clear about which of them RJ may meet.

I am sure that noble Lords will agree that one of the most important benefits of RJ is to give victims a voice in the criminal justice system. The amendment therefore seeks to reflect this. It puts an equal emphasis on victims and offenders in defining RJ requirements by focusing on victims’ need to have their voice heard. It also seeks to cover the different ways in which victims might want to express themselves. The phrase, “talk about” seems to us a direct and simple way of describing what might happen in the majority of cases—victims talking at a face-to-face meeting or mediation about the impact of the offending. The words,

“or by other means express experience of”,

is intended to cover other ways of sharing experience, thoughts and feelings.

In short, we appreciate that some victims may be too traumatised, or otherwise unable or unwilling, to talk about their experience. Instead, they may want to express their feelings in writing or drawing, or through other means. We therefore believe that the amendment will strengthen the role of victims in the restorative justice process. In the light of this, the Government propose to accept the amendment.

Amendment 113GD agreed.

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Moved by

[Lord Ahmad of Wimbledon]

116: Transpose Schedule 16 to after Schedule 13

[Lord Ahmad of Wimbledon]

My Lords, Amendments 116 and 117 are straightforward technical amendments that simply move Schedule 16 to sit after Schedule 13 and Schedule 17 to sit before Schedule 14. Due to the recommittal process, these schedules are not currently in the correct place when compared to their corresponding clauses. These amendments merely move the schedules into their correct chronological place in the Bill. I beg to move.

Amendment 116 agreed.

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[Lord Ahmad of Wimbledon]

My Lords, the amendments in this group relate to issues raised and debated in Committee. I assure the noble Lord, Lord Beecham, and the noble and learned Lord, Lord Goldsmith, that they have been considered in the intervening time. However, as the noble and learned Lord expected, the Government’s position on both issues is unchanged for the reasons that I will reiterate.

Amendment 116ZA seeks to introduce a sunset clause—I am always conscious that the noble Lord, Lord Beecham, often talks of sunset clauses after the sun has set; I am sure there is no direct relevance—for the DPA scheme. The Government still consider that to be unnecessary at present. Let me be clear: our approach to these proposals allows us to test the water, as my noble friend Lord Marks, said, by dipping a toe in to this novel approach. Our proposals have been designed to deal with the particular issue of bringing organisations to justice for economic crime.

However, let me reassure the noble and learned Lord, Lord Goldsmith, that the introduction of the DPA scheme is not a pilot. The Government are committed to DPAs becoming a permanent fixture in the fight against corporate economic and financial crime. For this reason, we do not consider the proposed sunset clause to be appropriate. Additionally, this provision could have a number of prejudicial consequences for any DPA under negotiation, in force or expired. The inclusion of such a clause would introduce uncertainty that might deter prosecutors and organisations entering into a DPA.

Let me assure the noble Lord, Lord Beecham, that the Government will review the operation of the scheme following its introduction, and I am content to reiterate that undertaking here. Pursuant to the Government’s policy on post-legislative scrutiny, of which noble Lords are aware, all new primary legislation is reviewed within five years of Royal Assent. We consider that there is no need to provide a statutory basis for the review of the DPA legislation and consider, on this occasion, that the undertaking we have given on post-legislative scrutiny conducted in the usual way is sufficient.

Amendment 116E, which was tabled by the noble and learned Lord, Lord Goldsmith, broadens the scope of the Secretary of State’s power to specify by order further offences in relation to which DPAs may be entered. As has been stated already, the amendment would extend its scope to the addition of any offence whatever that could be committed by an organisation. We discussed this issue in Committee and have considered with great care the potential to extend the scope of the DPA scheme to cover a broader range of offences. The Government remain of the view that the scope of the scheme should be limited to financial and economic wrongdoing and that it should not be extended beyond this by way of secondary legislation for the following reasons.

First, 77% of the respondents to our consultation agreed that corporate economic crime is the right focus for these proposals, at least initially. Fewer than half of respondents supported the broader availability of DPAs. As we made clear in Committee, the proposals set out in Schedule 17 have been designed as a response to the particular problems of prosecuting organisations alleged to have been involved in financial or economic wrongdoing. Too few organisations are being held to account for economic wrongdoing owing to the particular challenges in investigating and prosecuting the conduct. These challenges are not as acute for other types of corporate offending, including—and I know other noble Lords have mentioned this—environmental offending, where successful prosecutions have been made and where there is already a range of effective alternatives to prosecution. Those responsible for prosecuting offences other than economic and financial crimes have not identified a broader need for DPAs.

The introduction of DPAs, as I have already said, is very much a toe-dipping exercise. We need to ensure that the benefits of DPAs are proven, that there are no unintended consequences and that the right cases are still being prosecuted before considering broadening the scope. The Government are therefore opposed at this stage to removing the restriction on the offences that might be brought within the scope of these proposals. We remain firmly of the view that the current draft of the schedule draws the scope of the DPA scheme appropriately.

However, I would like to reassure the noble and learned Lord, Lord Goldsmith, that the Government will keep this matter under review. If DPAs prove effective in tackling corporate economic crime, and the case is made for extending their availability for other types of offending, then we will reconsider this issue in the future. However, we consider that such a significant change in the scope of the scheme should be made only following appropriate consultation, and by way of primary legislation, with the more rigorous scrutiny that that entails, compared with the affirmative resolution procedure.

I therefore ask noble Lords to wait until these proposals have been fully tested in relation to economic crime in England and Wales, have been shown to be effective and, most importantly, have gained public confidence, before pressing for an extension in their scope. This is an important step forward. It is a new area and therefore it is right that we focus for the time being on economic crime. In light of these points and with the assurance that we will keep the scope of the DPA scheme under review I would be grateful if the noble Lord, Lord Beecham, would agree to withdraw his amendment and the noble and learned Lord, Lord Goldsmith, would agree not to move his amendment.

[Lord Beecham]

My Lords, I am slightly disappointed by that response. It is not clear to me what form the review will take. Leaving aside the sunset clause—which I virtually left aside in moving the amendment—the amendment really talked about the consultation between the Government and the Director of Public Prosecution and the Director of the SFO and producing a joint report, as it were, for Parliament to discuss. It is not clear to me that that follows from what the Minister has described as the usual post-legislative scrutiny. I would be glad to be corrected if it is intended to bring effectively a joint report to be debated as part of that process.

In relation to the reluctance to envisage bringing forward other areas of law—environmental law was debated at some length at an earlier stage but not necessarily just that area—if we have a five-year review it will be at least six years before primary legislation is likely to be enacted, given that it would have to take its place in the queue, as it were, at that time. That strikes me as rather too long a period to wait, given the general acceptance that this offers a way forward, particularly in the field of something like the environment where you are not just looking at a financial penalty but at different ways, which we will touch on later in the amendments of my noble and learned friend, of corporations recognising their responsibilities in practical rather than purely monetary terms.

I have, as I have previously expressed, some reservations about extending the doctrine to individuals, although I take my noble and learned friend’s point about drugs, which is made on a day on which the Government seem to have been much too quick to reject a call from the Home Affairs Select Committee for a Royal Commission to look into what is not a noticeably successful policy on drugs and their impact on society and the courts. However, clearly, the Government are not minded to move things in the direction that either I or my noble and learned friend would wish tonight. In the circumstances, I beg leave to withdraw the amendment.

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[Lord Ahmad of Wimbledon]

My Lords, paragraph 5 to Schedule 17 sets out both the mandatory elements that every DPA must include, namely an agreed statement of facts, an expiry date and a non-exhaustive list of potential financial and non-financial terms. Each agreement will be tailored to take into account the particular type and extent of the alleged wrongdoing, as well as the wider circumstances of the case and the situation.

A financial penalty is one of the terms that an agreement may contain. We expect that a financial penalty is very likely to be a term in the majority of DPAs. Let me make the Government’s intention clear. The Government believe the level of the financial penalty should bear close relation to the fine that would have been imposed following conviction in court after a guilty plea. A DPA is not a soft option for organisations and setting financial penalties at an appropriate level is important in achieving that.

The noble and learned Lord, Lord Goldsmith, asked whether the financial penalty is optional. The Government believe that parties should be able consider all circumstances of the individual case and this may include a large compensation payment, which will take priority over financial penalty. In the drafting of paragraph 5(4) we have provided an approach to setting a financial penalty that will achieve that aim. The key aspects are: an incentive, in the form of a discount of any penalty—I will come onto the issue of a discount in a moment; consistency of approach with sentencing upon conviction; certainty as regards the level of financial penalty; proportionality as the parties and courts will be able to take into account the means of the organisation and the level of other monetary terms, such as compensation, that take priority.

The noble and learned Lord, Lord Goldsmith, and the noble Lord, Lord Beecham, both mentioned incentives. The primary incentive for entering into a DPA is to avoid prosecution and conviction, both of which have the potential to cause huge reputational damage and to give rise to other negative consequences for an organisation. As someone who has spent 20 years working in the corporate world, let me assure noble Lords that reputation for a corporate body is of immense importance, and a DPA provides a route where that can be protected.

Our scheme provides a further incentive: any financial penalty under a DPA would be discounted to reflect the position a defendant would be in after pleading guilty in a timely way. In other words, the organisation could benefit, as again the noble and learned Lord mentioned, from a discount of up to one-third. A total of 94% of the respondents to our consultation supported our proposals for a discount although, as has been pointed out already, there was no consensus on whether there should be a maximum reduction and what that might be. Indeed, the figure cited of 57% of respondents did not support having a maximum discount of one-third as we proposed. However, the important point is that there was no consensus as to what the alternative should be.

Furthermore, we know from our consultation and engagement that it is essential that there is consistency of approach and some certainty as to the potential level of financial penalties. Organisations made it clear to us during the consultation that they would not enter into a DPA if there was a real risk that the penalty negotiated and agreed with the prosecutor would be out of line with what a judge thought appropriate.

Through paragraph 5(4) we have, therefore, provided that where a financial penalty term is to be included in the agreement, the sum payable should be broadly comparable to the fine that would have been imposed for the alleged offence on conviction following a guilty plea. This will allow parties to have regard to the guidelines on both sentencing for particular offences and principles including discounts for early guilty pleas. We believe this provision provides an essential benchmark on setting a penalty, not only to the parties but also to the judge, who will decide whether the amount that the organisation and prosecutor have agreed is fair, reasonable and proportionate. Both parties and the judge have some comfort that they will be starting from a clear, common position. The organisation can therefore expect some certainty as to what it faces if it decides to enter into a DPA.

In determining a penalty that is “broadly comparable” to a fine a court would have imposed following a guilty plea, the parties will have regard to relevant sentencing guidelines produced by the Sentencing Council, including the guideline on an early guilty plea, which currently provides for a discount of up to a third. I will come on to the points regarding the Sentencing Council in a moment. But they will also have regard to other law and practice a sentencing court would follow so as to take account of matters such as the means of the defendant and how compensation should be prioritised over the other financial elements of a sentence. Without such a benchmark, we consider it likely that the two parties to the DPA could have such widely divergent opinions as to what the level of the penalty should be that discussions would be unworkable, making negotiations protracted and difficult. This is exactly what we are seeking to avoid by providing for DPAs. We therefore consider that paragraph 5(4) will enable the parties, and ultimately the courts, to ensure that the financial elements of a DPA, taken as a whole, reflect a proportionate and balanced approach. To be clear, this is essential to ensure that a DPA does not look like a soft-option; anything less, in our view, would risk giving that impression.

Amendment 116A would remove paragraph 5(4), thereby providing no guidance at all for the parties or court as to how to approach setting a penalty under a DPA. This would be undesirable for a number of reasons, not least that the parties would be denied guidance on an appropriate penalty. In the event that paragraph 5(4) was to remain part of Schedule 17, Amendment 116B would provide that the financial penalty term should not exceed the fine that a court would have imposed. Again, this would deny the parties and the court the appropriate level of guidance they desire, and suggests that the parties might agree a fine well below what a sentencing court would have imposed upon a guilty plea. For the reasons I set out earlier, this would in our view be unworkable. It also gives the impression that DPAs are a soft option. We do not agree therefore that it is necessary to set a bar as proposed, but with no lower limit. Paragraph 5(4) sets out the clearest and in our view most workable solution to determining a financial penalty.

The noble Lord, Lord Beecham, has tabled Amendment 116BA, which is a variation of an amendment considered in Committee in relation to parliamentary scrutiny of guidance on setting financial penalties. The amendment would require the Sentencing Council to lay before Parliament its proposals for setting a financial penalty. Although not explicit from the terms of the amendment, we understand this to mean any proposal prepared by the Sentencing Council in relation to financial penalty payable under a term of a DPA.

The Sentencing Council has informed us that it is committed to producing sentencing guidelines for many of the economic and financial offences listed within Part 3 of the schedule, which will be in place in time for the implementation of our proposals, to which the noble Lord, Lord Beecham, referred. These guidelines will also cover corporate offending. As a result, a separate DPA guideline is no longer necessary. We will instead be riding on the coattails of guidelines which are produced for a different purpose: namely, sentencing a defendant after a conviction. Those guidelines are already subject to appropriate consultation and scrutiny. Under the Coroners and Justice Act 2009 the Sentencing Council has an obligation to consult a number of interested parties on any sentencing guidelines it proposes. In particular, it has a statutory obligation to consult the Justice Select Committee of the House of Commons. This provides an appropriate opportunity for parliamentary input into these guidelines.

We do not consider that scrutiny beyond that described is necessary or appropriate. The fact that the Sentencing Council’s guidelines will be referred to by the parties and judges in the process is secondary to the primary purpose for which they are developed and used: that is, determining sentence on conviction, and for which there is a robust and comprehensive development and review process.

Amendments 116C and 116D relate to a provision we have made enabling the parties to negotiate a term specifying the consequences of non-compliance with an agreement. We included this provision as a way for the parties to deal with some forms of non-compliance with a DPA capable of being objectively determined such as the late payment of money under a DPA. The aim is for the parties to be able to remedy such non-compliance without recourse to the court: for example, by way of punitive interest in relation to a late payment. Such a term would be negotiated alongside all other terms of an agreement and approved by the judge. We do not envisage that such a term would be appropriate in all cases. Whether or not an agreement includes such a term, paragraph 9 of Schedule 17 provides the formal procedure for dealing with non-compliance of a DPA, which will be the most appropriate way for addressing most instances of non-compliance.