Lord Cromwell (CB)

My Lords, today we have discussed at length some very important issues that are also pretty bleak. It has been lightened for me only by hearing the noble Lord, Lord Jackson, referred to as neutral, which is not an epithet that I would normally attach to him. I am sorry that he is not in his place. I hope that my operational amendment will conclude with a more positive and optimistic outcome. I thank the Minister and his officials for meeting me to discuss this amendment, along with Labour MP Phil Brickell who, with the support of the APPG on anti-corruption, championed this amendment in the Commons. I am also grateful to that APPG for the excellent policy note it provided to the Minister following our meeting. I thank the Minister also for his helpful subsequent letter of 9 December. I thank the noble Lord, Lord Hogan-Howe, and the noble Baroness, Lady Jones of Moulsecoomb, for their kind support and for adding their names to the amendment. The noble Lord, Lord Hogan-Howe, wanted to be here but has been called away. He did, however, give me a statement, from which I will quote briefly when it is apposite. The purpose of the amendment is to include in the Bill a requirement to undertake a viability study of the establishment of an economic crime fighting fund. I am mindful that this is Committee so I will mention only the following three summary points about the amendment. First, there are two statistics to illustrate the scale of the problem. Economic crime overall currently costs the UK £350 billion a year. That is equal to 17.5% of GDP, but we spend less than 0.05% of GDP tackling it. Also, of the £100 billion in illicit financial flows alone each year, law enforcement recovers only some 0.2%. Secondly, crime-fighting agencies are currently trapped in a cycle of underfunding. The 2024 Civil Service survey found that only a third of National Crime Agency staff thought they had the necessary tools for their job, the lowest percentage of all 107 public bodies surveyed. This lack of funding limits vital recruitment, damages effectiveness and crushes morale. Meanwhile, despite fraud accounting for 43% of all reported crime last year, fraud prosecutions were down 50% on the 10-year median level. Thirdly—this is where the fund comes in—despite the underfunding in the face of the almost overwhelming level of economic crime, the agencies still manage to generate an average of £566 million per year in fines and recovered assets. However, most of that £566 million recovered per year is not reinvested in fighting economic crime. Instead, most of it goes to the Treasury and the Home Office. Redirecting even a fraction of these funds to the key agencies fighting economic crime would be transformational. This amendment would simply require a very timely viability assessment of enabling these agencies to break out of the current negative funding cycle, to fight more economic crime and to gain long-term sustainable funding for their vital work. Please note that the taxpayer would pay nothing. The funding would be paid for by the confiscated proceeds of crime—rather poetic justice. I clarify the following points, which arose in discussion of the amendment after Second Reading. First, the fund would be wholly separate from victim compensation and would not alter the status quo in that area. There are also many cases where economic crime cannot be linked to specific victims—for example, where a criminal is laundering money from a drug-dealing gang. Secondly, this is not a new or unique idea. All 13 supervisors for the accountancy sector retain penalties imposed for anti-money laundering breaches. The Ministry of Justice is permitted to retain part of the value of fines and fixed penalties collected, amounting to nearly £360 million in the financial year 2024-25. The FCA is allowed to retain a proportion of fines. This amounted to £71.6 million in the same period. These are just some UK examples. There are numerous other precedents of fines being reinvested, in the UK and internationally. Thirdly, the current system is opaque and subject to the dreaded annularity rules, meaning that any money which the agencies retain must be spent by the year’s end or it is taken away. This encourages some truly bizarre behaviours to use up the money in time. One example we discussed with the Minister in our meeting was a sponsored yacht race. There is also a specifically British wrinkle here. Police forces, as Crown servants rather than civil servants, are subject to different accounting rules. Thus the Met can keep some of the seized cash and spend it over multiple years, allowing it to plan and use it strategically. I quote the noble Lord, Lord Hogan-Howe: “The police force has been able to take a share of the criminal assets they seize, should a court so decide. Everyone accepts that the amount seized is a small fraction of the criminal assets out there. The police’s share of money is pooled in the Treasury and then returned to the forces—albeit that this process often takes 1-2 years. Nevertheless, this allows the police to invest in discovering and seizing further criminal assets”. However, unfortunately, the National Crime Agency, the Serious Fraud Office, HMRC and the Crown Prosecution Service cannot do this. They are, as mentioned, captured by Treasury rules that require central government bodies each year to return what they have not spent. This confused and chronic underfunding cannot continue. While I welcome the Government’s anti-corruption strategy and their interest in improving the economic crime levy and the ARIS systems, recent discussions with HMT and other officials suggest that they are not going to do anything substantive to move forward, claiming there is a lack of data from law enforcement agencies on the return on investments from the use of these funds. I therefore suggest to the Minister that consultation on the viability of the fund that the amendment proposes would be the right opportunity to speed up the frankly glacial progress made so far on data collection in the Home Office. Finally, I remind the Minister and the Committee of two things. First, the amendment would not require the fund to be established, but simply that its viability be examined. Secondly, there was and is wide cross-party support for the amendment in the Commons. Details of this support have been provided already to the Minister. I therefore ask him the following question. If, as he may indicate in response, he or the Government consider that such a viability study could be undertaken without legislation, will he commit from the Dispatch Box today to implement such a study and tell the House when it can be expected to start and to report? I give the last word to the former director of the National Economic Crime Centre, Adrian Searle: “Substantive and sustained funding … is crucial. The resource currently deployed is not commensurate with the scale of the problem … Doing the necessary analysis appears to be a no brainer”. I look forward to any comments from others and hope for a positive response from the Minister. I beg to move.