Labour today set out how a future Labour government will give law enforcement agencies new powers to force criminals to handover the profits of their criminal activity.

Despite all their tough-sounding rhetoric, the Government is failing to make criminals pay. The National Audit Office has found that under the current system, only 26p of every £100 of criminal proceeds ever gets confiscated. Meanwhile, local policing is being hollowed out, with neighbourhood police teams across the country being scaled back.

Labour is today setting out a reform package to ensure criminals’ assets are reclaimed and put to good use. We will:

• End early release for criminals in jail for refusing to pay;
• Make it easier for prosecutors to freeze suspects’ assets quickly, to prevent illegal profits from being hidden;
• Close loopholes that allow criminals to hide their assets with family members (“designer divorces”) or overseas – a change that the Shadow Home Secretary, Yvette Cooper called for two years ago

Labour will pledge to plough any additional cash raised into neighbourhood policing and criminal justice.

Yvette Cooper MP, Labour’s Shadow Home Secretary, said in a speech to the Police Federation annual conference today:

“And we also need to be smarter about the investment frontline policing needs.

“We opposed the government’s 20 per cent cuts to policing

“We supported 12 per cent cuts – that would have saved thousands of officers.

“Because the economy has been so slow to grow we now face new fiscal challenges.

“We are worried about the scale of the further cuts David Cameron and Theresa May are planning.

“But we also know there won’t be much money around. So that’s why we are looking now for ways to save the money the police service needs.

“It’s crazy that the police service is being forced to subsidise gun owners. So we’d change that to introduce full cost recovery.

“And it’s time criminals paid their way.

“In 2012, only 2 per cent of the organised criminals sent to prison having profited from crime paid their debt to society.

“Many criminals serve only three or four years of the single sentence allowed for refusing to give the money back.

“That’s not right. We need to change the law.

“So we will put an end to criminals being let out early after refusing to pay. They must pay up or serve their sentence.

“And with that and other changes we can plough more money back into neighbourhood policing and the criminal justice system.”

Emily Thornberry MP, Labour’s Shadow Attorney General, said:

“With only 26p out of every £100 made through crime ever being confiscated, it’s clear that criminals are running rings around the laws that are supposed to strip them of their profits.  Ministers have known this for years but have done nothing about it, even though these failings cost the cash-strapped criminal justice system millions.

“A Labour Government would give police and prosecutors the tools they need to freeze criminal assets at the earliest stage, to go after money hidden overseas and to pierce the bogus schemes that criminals use to wriggle out of paying back their ill-gotten gains.

“For those who still don’t pay and get sent to jail as a result, there’ll be no right to early release until they’ve paid back what they owe. Labour would then invest the additional assets we confiscate back into policing and the criminal justice system to make communities safer.” 

Detail

Current performance is poor

A recent NAO report^[1] laid bare the failure of the government’s performance on asset recovery. For example:

• In 2012-13, the total value of income collected from Confiscation Orders was £133 million - only slightly more than the annual cost of administering the entire system (£102m);^[2]
• The amount collected by the police has fallen since the Government came to office: in 2012-13 it was £82.5m, down from £88m in 2010
• The volume of Confiscation Orders has dropped since 2010 suggesting that asset recovery is being de-prioritised: in 2012/13, only 6,392 Confiscation Orders were made (down from 6,431)
• This is despite a total of 673,000 people having been convicted of a crime in the past year, the majority of which involved a financial element
• Based on the estimated size of the criminal economy (c. £52bn), the NAO estimate that only 26 pence is currently collected out of every £100 generated by criminal activity.

In particular, the NAO report criticised the government’s lack of direction and leadership on asset recovery.

“Without knowing what constitutes success overall or in individual cases, the bodies involved have no way of knowing which criminals, court cases, or uncompleted orders should be prioritised for confiscation activity and resources”.

Labour’s proposals

Ending early release

The main sanctions for non-payment - default prison sentences of up to ten years and additional 8 per cent interest on the amount owed – are not a strong enough incentive for criminals to reveal hidden assets. In practice, most criminals serving such sentences are released after three or four years, because of early release rules and simply view their time in prison as an occupational hazard. This is borne out by the statistics: in 2012 only 2 per cent of offenders paid in full once the sentence was imposed.

Labour would end early release for criminals serving default sentences who refuse to pay.

Freezing assets quickly

It is crucial that agencies act quickly to restrain assets, otherwise they are likely to be dissipated. But quick action has become less common under this government. In 2012-13, only 1,368 Restraint Orders to freeze assets were imposed; down nearly a third (27%) from 2010.^[4]

Part of the problem is that the test for restraint is prohibitively high. The onus should be on the suspect (rather than the prosecutor/ investigator) to show why the assets should not be restrained. Another problem is that Section 11 of POCA allows a maximum of 6 months for payment to be made if a defendant shows that he/ she needs time to pay the order, and a further 12 months if it is deemed that there are ‘exceptional circumstances’. The time period is to allow time for the criminal to realise their assets, for example, by selling their house. However, money in bank accounts is easily realisable. The blanket 6 month rule simply increases the likelihood of the defendant distributing/ hiding their assets.

Labour will consult on:

• enabling prosecutors to apply to a judge to lower the threshold for freezing assets, with the onus on the suspect to show why the assets should not be restrained, rather than on the investigating agency;
• imposing shorter time limits on criminals to pay back their illegal profits, rather than the current blanket 6 months. This would mean redrafting Section 11 of POCA so that the easily accessible assets, such as money in bank accounts, could be seized within a much shorter period e.g. 14 days;
• placing those suspected of serious crimes under a legal duty to disclose their all their assets and liabilities to police and prosecutors, with criminal penalties for make misleading statements.

Ending ‘designer divorces’

An attempt to confiscate assets can be thwarted by the emergence of third parties (e.g. an ex-wife) who assert that they, not the criminal, own the property either wholly or in part. Sometimes the claims are genuine, sometimes they are a ruse by the offender to obstruct confiscation.

The Shadow Home Secretary, Yvette Cooper, called for reform on this issue two years ago. A Labour Government would bring forward the determination of third-party claims from after conviction to the restraint stage, which usually occurs before the trial. That would give suspects less time to drum up bogus claims. The onus would then be on the suspect to identify any third parties, who would have 21 days to lodge a claim or accept that the property is liable for confiscation. If any claims pop up after that, the court would be entitled to assume that it is bogus.

Organised criminals will also often try and hide their assets overseas out of reach of our police and prosecutors.

Under a Labour Government, a court would be able to fine or jail someone who sold an overseas property that was subject to a freezing or confiscation order. Labour would also consult on giving the court the power to compel suspects to return to the UK any liquid assets overseas that are subject to a restraining order.

Ploughing the extra cash into neighbourhood policing

Labour recognises that there will be less money to spend in the next parliament, which is why finding ways for public services to deliver more with less is so crucial. That is why we will ensure that any additional revenue raised is ploughed back into neighbourhood policing and criminal justice.