Lord Cromwell
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Lord Cromwell
“Report: economic crime fighting fund(1) The Secretary of State must undertake an assessment of the viability, and potential merits, of establishing an economic crime fighting fund based on the principle of reinvesting a proportion of receipts resulting from economic crime enforcement into a pooled fund for the purposes of providing multi-year resourcing for tackling economic crime.(2) The assessment specified in subsection (1) must also examine the impact of budget exchange rules on the functioning of the asset recovery incentivisation scheme. (3) In carrying out the assessment, the Secretary of State must consult such persons as they consider appropriate.(4) The Secretary of State must publish and lay before Parliament a report on the outcome of the assessment by the end of the period of 12 months beginning with the day on which this Act is passed.”
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.
Baroness Jones of Moulsecoomb (GP)
My Lords, I do not normally get involved with money issues because they are too messy and convoluted. The last time I recommended any sort of money being given to the police was when I was on the Metropolitan Police Authority. It was going to scrap the wildlife crime unit, and I argued strongly that we should keep it. It was not about naughty squirrels; it was about people committing crimes against wildlife. I felt it was an incredibly important unit, but that is by the by.
This is a growing crime. I can remember discussing it 20 years ago and people saying, “We need more money to fund the work and we need better systems”, and all that sort of thing, so it is surprising that we need this now after so long. It addresses a persistent weakness in our response to economic crime—the lack of stable long-term funding. Economic crime undermines public trust and causes real harm to individuals and communities, yet the agencies tasked with tackling it are often operating on short-term budgets, dependent on annual settlements and unable to plan effectively. This amendment asks the Government to undertake a serious assessment of whether a proportion of the proceeds recovered from economic crime could be reinvested into a fund to strengthen enforcement. That strikes me as an incredibly sensible approach; it would also stop the Treasury from grabbing the money and using it in even worse ways.
Lord Hanson of Flint (Lab)
I am grateful to the noble Lord, Lord Cromwell, not just for his amendment today but for his patience in sitting through the Committee debates prior to introducing his amendment this evening. I am also grateful for the meeting we had with him and Phil Brickell, MP for Bolton West, in October and the meeting we had on 18 November.
It is important that Amendment 482 is considered. It would require the Government to consult on the viability of a ring-fenced economic crime fighting fund, and the intention of the amendment is to examine whether such a fund could provide multi-year resourcing for tackling economic crime. I am grateful for the comments from the noble Baronesses, Lady Doocey and Lady Jones of Moulsecoomb, in support of the amendment. The amendment recognises the significant harm that economic crime causes—reflected in the contributions made—to individuals, businesses, the economy and wider society.
The Government remain committed to tackling economic crime. That is evidenced not just by words in this Chamber but by our continued investment through the asset recovery incentivisation scheme and the economic crime levy, which has allocated £125 million to tackling economic crime in recent months. These schemes are delivering state-of-the-art technology to provide law enforcement agencies with the tools they need to stay ahead of criminals. It also includes an important factor, which is the recruitment of 475 new officers across the threat leadership, intelligence, investigative and prosecution capacity. We are putting people on the ground to deal with this issue as part of the, we hope, tangible benefits that we can get in the fight against economic crime. As a Government, we want to continue to work with our partners to ensure that we are most effectively investing the funding available.
I understand and accept—and did so in the face-to-face discussions we had with the noble Lord, Lord Cromwell, and the Member of Parliament Phil Brickell—that the call for sustaining funding is an important one that needs to be investigated. I want to confirm to the noble Lord what I hope is of help to him: the Government are committed to exploring the funding landscape with the aim of strengthening economic crime enforcement. This is witnessed by the statements we have made in the recently published economic anti-corruption strategy, which was published last December —particularly paragraph 42, on page 23, which I quote for the noble Lord:
“In the context of Spending Review 2025”,
we will
“explore the funding landscape with the aim of strengthening economic crime enforcement”
as a joint Treasury and Home Office priority commitment in that anti-corruption strategy.
This strategy is fixed and there was a timescale for it when published. I hope that the noble Lord, Lord Cromwell, will accept our intentions in identifying the issues that he has raised and not just doing what we have done to date, which is to ensure that we have put resources in already. I hope that that review commitment in the strategy from December is of help to the noble Lord regarding the objectives of his amendments here today.
With that commitment, I would be grateful if he would at least welcome it and hold us to account on it and, in doing so, withdraw his amendment today.
Lord Cromwell (CB)
First of all, I can certainly promise to hold the Minister accountable for it, so I hope that pleases him. I thank the speakers—the noble Baronesses, Lady Jones and Lady Doocey, and the noble Lord, Lord Davies—who have kindly commented on this amendment. I thank the Minister in particular for engaging with me before and for his comments tonight. I am still not quite sure what I am looking at. I think he used the phrase “exploring the funding landscape” a couple of times. When does that exploration reach its destination and come up with a report?
Lord Hanson of Flint (Lab)
We have the strategy, which was published in December. It is a fixed-term strategy, which includes the commitment to examine the points that the noble Lord has mentioned. My time is quite stretched at the moment but, if the noble Lord would find it helpful, I am very happy for him to meet officials dealing with that aspect particularly. We can potentially explore from there whether his input is helpful in stretching that strategy and making some positive outcomes from it.
Lord Cromwell (CB)
I thank the Minister for that answer. I was described in a previous debate as a legislative terrier, so I can assure him that I would like very much to meet his officials and, if necessary, nip their heels, because I am after a date when we are going to find the result of this viability study. Let us leave it at that. I am very grateful for his positive response. On that basis, I beg leave to withdraw my amendment.
Lord Cromwell (CB)
My Lords, I have added my name to this amendment, which I thoroughly support, despite it committing the legislative sin of having a list in it. It references animal hustling, which is probably already a criminal offence in a different area of the law, so I will leave that alone. The question surely posed by the amendment is: why is a rural-specific strategy needed? Not only does rural crime have specific characteristics, too often it happens out of sight and perhaps out of mind of the often metropolitan policymaker.
This concerns three related themes, the first of which is isolation. Rural homes and businesses are often isolated, making them vulnerable to crime, including violent and destructive crime, while the motorway network provides a rapid and anonymous escape route. A more recent phenomenon is the use, from the highway, of drones to scope out machinery or products for later theft —something we will return to with Amendment 486A. The police generally do their best to engage with the local community—I pay tribute to Leicestershire’s Neighbourhood Link scheme, which is local to me—but, on an area basis, police resources are spread very thinly.
The second theme is waste dumping, which has been touched on. There has at last started to be some press coverage of the large-scale and often toxic waste dumped by the lorryload at illegal waste dumps in the countryside, of which a growing number are now being recognised. Anywhere that a vehicle can pull over out of sight for just a few moments, there is constant fly-tipping of discarded furniture, building materials, tyres and unwanted household goods—to say nothing of the endless food wrappers, beer cans, bottles and seemingly ubiquitous Red Bull cans, which now form a continuous linear rubbish dump along the base of almost every rural hedgerow in my area. There is also the widespread dumping and then setting alight of stolen cars. Imagine the effect in a field of wheat when that happens.
I would also like the Committee to note that, in responding to a series of Written Questions from me, Defra—the “ra” does stand for “rural affairs”—has confirmed that it has no current obligation to address these matters beyond the immediate edge of national highways. Criminals know this, of course, and exploit it by driving up rural tracks or into fields to tip their waste.
The third theme is wider rural crime. I recently spoke to a farming family who, against everything they believe in, kill all the hares on their land every year. Why? Because, if they do not, violent gangs in four-wheel drive vehicles come and deliberately crash through their hedgerows, career across their crops and kill the hares on their land with dogs. Such “coursing”, as it is called, in some cases involves international criminal syndicates betting large sums on the outcome.
I could go on: churches are stripped of their roofs, there are armed gangs of violent poachers, raids and threats at village shops and post offices and widespread vandalism and theft. In short, rural areas are under siege from people who, with either criminal intent or anti-social indifference, are turning what we like to portray as a green and pleasant land into a rubbish-strewn hinterland whose population increasingly fear for their safety, livelihoods and property. That is why we need this amendment: to recognise that rural areas have specific characteristics, specific types of crime and an overall lack of focus, despite the best efforts of an overstretched police force.
Finally, I will refer briefly to the Minister’s answers to questions on the Statement on the police reform White Paper on Tuesday evening. He was asked a question on how rural policing would be covered. His reply was that the Government were looking at reviewing the funding formula and that the overall organisational model would include responsible, non-elected persons. I do not wish to express a view on the reforms, but I respectfully point out that he did not say anything about how rural areas would be affected by the reform.
Secondly, in response to a question on waste crime, the Minister said that organised crime was behind it—he was correct, of course—and that regional and national agencies would be looking “over time” at how to deal with serious organised crime. I suggest to him that a dedicated, rural-focused strategy is needed to prevent and tackle such crime, not just the Environment Agency, which largely deals with post-facto matters.
There needs to be a specific strategy to develop and enforce appropriate countermeasures to what is not a passing rural crime wave but a rising flood. I commend the amendment for highlighting this and I hope that the Minister and the Government will get behind it.
Lord Forbes of Newcastle (Lab)
My Lords, I seek to make a brief contribution to the discussion on this amendment. Noble Lords might ask themselves why somebody whose political experience was predominantly in a metropolitan area would seek to speak on rural issues, but I grew up in Weardale, in County Durham, and my mother still lives in the dale. From growing up there and from contemporary experiences, I know that the issue of rural crime is felt very keenly by communities in rural areas and can damage the fabric of those communities in a way that makes them feel further under threat.
To the list of examples of crime given by the noble Baroness who spoke just a few moments ago I can add the stealing of oil from fuel tanks, the stealing of logs from log stores, and drink-driving, which we know is more prevalent in rural areas than it is in urban areas. That is why I particularly welcome the Government’s commitment to reviewing and reducing the drink-driving limits for the whole country.
In the context of this amendment, we need to reflect on why some of these issues occur in rural areas and what the root causes of the lack of response may be. Many rural communities have a greater sense of trust and of community spirit, but that can have a downside, in that it can make people more susceptible to fraud and more liable to be scammed, particularly online. Alongside the amendments under consideration, I welcome the measures to introduce stronger investigatory powers and a stronger national approach to such crimes. Although crime can affect people anywhere, for those living in rural or isolated areas without support around it can be quite devastating.
There is a challenge around the whole-scale withdrawal of police stations and a police presence from many of our rural communities. That has resulted in one particular case that I am aware of, because it affected my mother. She was subject to the theft of some logs from land that she owns. The police response in that area was, “We suggest you go out and buy some cameras from Amazon to see if you can record this”. I do not think that that is sufficient, appropriate or suitable in the circumstances. It implies that a small-scale crime such as that is of no grand consequence, but to somebody like my mother, it has a very real consequence, because it has affected her fuel supply over the winter period.
There is an issue about the particular nature of crimes that are more prevalent in rural areas. As we come to Report, I hope we can look more fully at ways in which the Government can work alongside police and crime commissioners, while they are still in existence, and whatever their successor bodies are, to ensure that rural areas do not feel second best when it comes to crime prevention and community safety.
Lord Deben (Con)
On the personal attack, Mr Polanski is the leader of a party. If he cannot be referred to in this House, I wonder what on earth we are coming to.
Lord Cromwell (CB)
I will follow the strictures just put on us to stay with the amendment. I say to the noble Lord, Lord Deben, as he still came back for another bite, that as someone who sat on the Industry and Regulators Committee that looked into the water industry in detail, I know that the Victorian system reached its capacity in 1960, and public and private ownership both failed in different ways for the simple reason that he gave: short-termism. That is the problem we face: the multiple billions that have to be spent over a long period, and no Government looking to get re-elected for the next five years will ever spend it.
Lord Davies of Gower (Con)
My Lords, I thank the noble Baroness, Lady Bakewell of Hardington Mandeville, for tabling this amendment and the noble Earl, Lord Russell, and the noble Baroness, Lady Jones of Moulsecoomb, for putting their names to it and contributing today.
Although we understand the noble Baroness’s intention, we do not believe that this amendment is the right approach to ensuring that our water companies act ethically and serve the customer. Neither do we believe that increasing offences for companies or for individuals is the right approach to decreasing water pollution. They are already subject to the powers of Ofwat and the Environment Agency; additional measures will just drive up legal costs and encourage hostile behaviour.
The Water (Special Measures) Act of last year placed a new duty on companies to publish an annual pollution incident reduction plan, and we should wait and see what the outcome of that policy is before we attempt to legislate further. It is undoubtedly an important issue, but we simply do not believe that this is the best way to go about it. I look forward to hearing the Minister’s response.
Lord Cromwell
“Use of drone technology: offence(1) A person commits an offence if they use drone technology to—(a) conduct reconnaissance of land or buildings with the intent of committing a further crime, or(b) carry items including controlled drugs, stolen goods, illegal weapons, harmful substances, or other items intended for illegal use in respect of people, property or good order. (2) A person guilty of an offence under subsection (1) is liable—(a) on summary conviction, to a fine not exceeding level 5 on the standard scale;(b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both).”
Lord Cromwell (CB)
My Lords, I have just been informed by the noble Lord, Lord Garnier, that I am about to commit almost a criminal offence by speaking at all. “We few, we happy few”. I will be as quick as I can. I start by thanking the Ministers, the noble Lords, Lord Hanson and Lord Hendy, for their kind assistance in considering this amendment, and the former’s very helpful letter to me of 29 January.
Drone technology has transformed many aspects of life and it would be foolish to suppose that it would not be used by criminals as part of their activities across the world. The technology continues to evolve, to become autonomous and t be coupled with AI. Legislation, almost by definition, cannot keep pace with such evolving technologies. While noble Lords will be relieved to know that I am not going to tilt at AI windmills tonight, I put down this amendment to highlight the abuse of drones for criminal purposes just for reconnaissance and for illegal deliveries. I have been on the receiving end of the former, finding drones buzzing around business premises to scope out what machinery or products are stored there which criminals can later return to steal. I understand that drones are similarly used along railways, for example, to look for copper wiring to steal.
The Minister’s letter of 29 January argues that the necessary law is, on paper, largely there, and that the real challenge lies in practical enforcement. His letter explains that, while technically it may be possible to show that someone is, under the Theft Act 1968, committing the offence of “going equipped for stealing”, reconnaissance as such is nevertheless not a criminal offence, essentially because it is very hard to prove intent. I entirely accept this, and also the Minister’s point that it would not be practical or proportionate to create no-fly zones over every possible target of theft.
However, I worry about people who feel unprotected when drones are routinely flown over domestic, commercial or public property in a way that is plainly intrusive and potentially preparatory to crime. It seems that nothing can be done. They and the police must stand off and wait until an act of criminality under existing laws is committed. I suspect that we may, in that case, see people start to take the law into their own hands.
As regards the use of drones as a means of delivery, their use to get drugs and other items into prisons is already well known, but there is a growing and wider use of drones as a delivery service for illegal items elsewhere. I was recently told about a delivery drone seen regularly flying back and forth between a drug dealer’s hilltop house and the settlement below.
The Minister’s letter encouragingly points out that new regulations now require drones to be equipped with what is called direct remote identification, which works like a digital number-plate that can be detected, apparently by anybody with a smartphone, who can then report this to the police.
Lord Katz (Lab)
I thank the noble Lord, Lord Cromwell, for setting out the case for his amendment. In tabling the amendment, he wrote to my noble friend Lord Hanson of Flint and to my noble friend Lord Hendy of Richmond Hill at the Department for Transport on the issue.
I think across the Committee we share the same concerns. I stress that the Government take the issue of the use of drones to facilitate illegal activity extremely seriously. However, my noble friend Lord Hanson of Flint set out in his letter to the noble Lord that the challenges of responding to these are not gaps in our criminal law so much as limitations on the practical enforcement tools available and in regulation to improve the visibility and compliance of drones. We are working to address these issues by supporting the development of counter-drone technologies and operational approaches, and ensuring regulations are in place that enable the legitimate use of drones while assisting operational responders in identifying illegitimate users.
Amendment 486A seeks to criminalise the use of drones for criminal reconnaissance and the carrying of illicit substances. The act of criminal reconnaissance is not in itself currently an offence, as proving intent, prior to an act being committed or without substantive additional evidence, would be extremely difficult for prosecutors. Criminal reconnaissance using a drone encounters the same issue. It would be impractical and disproportionate to arrest anyone for taking photos of a property or site, or for piloting a drone. In both instances, the act of reconnaissance would not be practically distinguishable from legitimate everyday actions, making the proposed offence effectively unenforceable. Where intent could be proven, it is likely that such acts could be prosecuted under existing legislation—for example, the offence of going equipped for stealing in Section 25 of the Theft Act 1968.
The carrying of illicit materials, whether it is in and out of prisons or elsewhere at large, is already an offence, regardless of a drone’s involvement. There is already a comprehensive regime of offences relating to the possession and supply of drugs, weapons and other illicit materials. I do not think that the amendment would address any gaps in the criminal law.
The Government have already made changes to the unmanned aircraft regulations to require drones to be equipped, as the noble Lord, Lord Cromwell, set out, with direct remote identification, which will improve visibility and accountability of compliant drones. This system will allow drones to broadcast identification and location information in-flight and will help identify drone operators who may be acting suspiciously or breaking the law.
I share the sentiment of the noble Lord and the Committee in seeking to curtail the use of drones for criminal purposes. However, for the reasons I have outlined, I ask that he withdraw his amendment and let me sit down—as I have a cough.
Lord Cromwell (CB)
My Lords, I thank everyone who has taken part; I am not going to namecheck—you all know who you are.
It would be an act of cruelty to encourage the Minister, with his cough, to say anything further. I was tempted to ask him to go into a lot more detail, but I do not think that is a good idea.
I suspect we may need to come back to this issue as drone technology continues to advance. I cannot resist mentioning that, more locally, the large giraffe fence that is erected in front of this building will be absolutely no defence against a drone attack—so let us hope it does not come. With that, I beg leave to withdraw my amendment.