Dec 16, 2013 — Confiscation orders. Criminal Justice System. Report by the Comptroller and Auditor General. HC 738 SESSION 2013-14 17 DECEMBER 2013
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The National Audit Of˜ce scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas˚Morse, is an Of˜cer of the House of Commons and leads the NAO, which˚employs some 860 staff. The C&AG certi˜es the accounts of all government departments and many other public sector bodies. He˚has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources ef˜ciently, effectively, and with economy. Our˚studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of almost £1.2 billion in 2012.Our vision is to help the nation spend wisely. Our public audit perspective helps Parliament hold government to account and improve public˚services.

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Report by the Comptroller and Auditor General Ordered by the House of Commons to be printed on 17 December 2013This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordance with Section 9 of the Act Amyas Morse Comptroller and Auditor General National Audit Of˜ce 16 December 2013Criminal Justice SystemHC 738 London: The Stationery Of˜ce £16.00Con˜scation orders

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This study assessed the value for money of the administration of con˜scation orders, which are the main way through which the government carries out its policy to deprive criminals of the proceeds of their crimes. © National Audit Of˜ce 2013 The text of this document may be reproduced free of charge in any format or medium providing that it is reproduced accurately and not in a misleading context.The material must be acknowledged as National Audit Of˜ce copyright and the document title speci˜ed. Where third party material has been identi˜ed, permission from the respective copyright holder must be sought.Links to external websites were valid at the time of publication of this report. The National Audit Of˜ce is not responsible for the future validity of the links.Printed in the UK for The Stationery Of˜ce Limited on behalf of the Controller of Her Majesty™s Stationery Of˜ce 2611568 12/13 PRCS

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The National Audit Of˜ce study team consisted of: Claire Buckley, Martin Chong, Jim˚Cotton, Darryl English, Toby˚Evans, Alex Quick, Scott McMillan and Karmen Tse, under the direction of˚Aileen Murphie. This report can be found on the National Audit Of˜ce website at˜scation For further information about the National Audit Of˜ce please contact: National Audit Of˜ce Press Of˜ce 157Œ197 Buckingham Palace Road Victoria London SW1W 9SPTel: 020 7798 7400 Enquiries: Website: Twitter: @NAOorguk Contents Key facts 4Summary 5Part One Background 10 Part Two Governance and accountability 17 Part Three Identifying, investigating and imposing con˜scation orders 25 Part Four Enforcing con˜scation orders 32 Appendix One Our audit approach 42 Appendix Two Our evidence base 44 Appendix Three Our stakeholders 46

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4 Key facts Con˜scation orders Key facts 6,392 con˜scation orders made by the courts in 2012-13. £52 billion National Fraud Authority™s estimated loss to the UK economy from˚fraud in 2012-13. £1 billion collected by enforcement agencies from con˜scation orders˚since˚1987. £1.46 billion con˜scation order debt outstanding at September 2013. £177 million debt HM Courts & Tribunals Service estimate to be collectable in˚its˚2012-13 trust statement. 2 per cent outstanding con˜scation order debt paid off in full after courts imposed a default sentence in 2012. 45 hours (1.25 full time equivalent) our estimate of the time spent each week by HM Courts & Tribunals Service regional con˜scation units Œ in opening, saving and downloading data into the Con˜scation Order Tracking System. 26p £133m £102m estimated amount con˜scated for every £100˚of criminal proceeds in˚2012-13 collected by enforcement agencies from con˜scation orders˚in 2012-13 our estimated annual cost of the end-to-end con˜scation order process

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6 Summary Con˜scation orders 5 Despite these practical barriers, the amounts that are actually con˜scated are small, especially when set against successive governments™ tough approach and ambitious goals, and the powerful supporting legal framework. This report looks at why˚this is so, speci˜cally examining: the background ( Part One );governance and accountability ( Part Two );identi˜cation, investigation and imposition ( Part Three ); and enforcement ( Part Four ).Key ˜ndings 6 There is no coherent overall strategy for con˜scation orders. 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 con˜scation activity and resources. Many criminal cases do not end up with a con˜scation order which is a missed opportunity, and for those that do, law enforcement agencies have not systematically revisited cases to ˜nd new evidence on criminal proceeds. In 2012-13, 673,000 offenders were convicted of a crime, many of which had a ˜nancial element, yet only 6,392 con˜scation orders were set. While there are a number of individual crime strategies owned by individual bodies, decision -makers across the criminal justice system, such as senior police of˜cers, have often not prioritised con˜scation. The government™s recently published organised crime strategy, led by the Home Of˜ce, recognises the need for more collaboration and a more targeted approach, which is encouraging (paragraphs 2.13 to 2.16). 7 A ˚awed incentive scheme and weak accountability compounds the problem . The Home Of˜ce™s Asset Recovery Incentivisation Scheme is based on income con˜scation only and not contribution to wider policy goals such as asset denial or crime disruption. Its impact is further limited because poor records and reporting often mean staff are unclear how scheme monies are spent. There is also no clear link between activity and formal ˜nancial reporting. All con˜scation order impositions, receipts and assets are reported solely in HM Courts & Tribunals Service™s annual trust statement, even though HM Courts & Tribunals Service has no direct in˛uence on what other bodies do (paragraphs 2.7 to 2.9 and 2.11 to 2.12).

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Con˜scation orders Summary 78 The absence of good performance data or benchmarks across the system weakens decision-making . HM Courts & Tribunals Service, the Crown Prosecution Service and the Serious Fraud Of˜ce work hard to enforce con˜scation orders. HM˚Courts & Tribunals Service, for example, collects successfully 90˚per˚cent of their orders under £1,000. But for all three bodies there is a lack of cost and time data, and information about what is collectable. When combined with not having clear success criteria, this makes meaningful costŒbene˜t assessments on enforcing different orders impossible. It is not clear, for example, if HM Courts & Tribunals Service™s activity on lower-value orders is cost-effective in terms of wider criminal justice outcomes and whether those resources should be redirected to enforcing higher-value orders (Figure˚4,˚paragraphs 2.10 and 4.6). 9 Throughout the criminal justice system there is insuf˜cient awareness of proceeds of crime and its potential impact . Within law enforcement and prosecution agencies, few of˜cers and staff have good understanding about proceeds of crime legislation. In˚many cases effective powers, such as restraint orders, are applied late or not used at˚all, and specialist ˜nancial investigators are introduced to cases when audit trails have already run cold. There is also varying judicial expertise on proceeds of crime, hampering enforceability of some orders (paragraphs 3.5 to 3.7 and˚3.15 to 3.16). 10 Enforcement ef˜ciency and effectiveness are hampered by outdated, slow ICT systems, data errors and poor joint working . The systems are not interoperable and there is too much manual rekeying of information. For example, HM Courts & Tribunals Service regional con˜scation units™ manual keying takes 45 hours a week for their tracker system alone. There are also numerous data errors, especially in inputting information after court hearings. Within bodies we found many dedicated and committed staff, but there was too little joint working between their respective organisations to make the most of their efforts (paragraphs 4.4, 4.14 to 4.16 and Figure 19). 11 The main sanctions for not paying orders, default prison sentences of up to ten years and additional 8 per cent interest on the amount owed, do not work . HM Courts & Tribunals Service found that only 2 per cent of offenders paid in full once the sentence was imposed in 2012. Furthermore, most stakeholders expressed concerns about the effectiveness and power of current sanctions. The Home Of˜ce has recognised some of these weaknesses and is proposing to introduce a more effective sanctions regime in 2014 (paragraphs 2.15 and 4.17 to 4.18).

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8 Summary Con˜scation orders Conclusion on value for money 12 The government intends to deny criminals the proceeds of their crimes, and thereby reassure the public that crime does not pay. However, the process for con˜scating criminals™ assets is not working well enough. While the government has not speci˜ed a target, only about 26p in an estimated £100 of criminal proceeds was actually con˜scated in 2012-13. 13 The lack of coherent strategic direction and agreed success measures, compounded by weak accountability and a ˛awed incentive scheme, is the fundamental problem. This is combined with poor performance and cost information, lack of knowledge, outdated ICT systems, data errors and ineffective sanctions. Overall such problems mean that the con˜scation order process, which we estimate costs more than £100˚million a year, is not value for money. Recommendations a The Home Of˜ce, the Ministry of Justice and the Attorney General™s Of˜ce and their bodies, working with law enforcement agencies, should develop a coherent and joined-up cross -government strategy for con˜scation orders, including more effective˛governance . The strategy should: de˜ne clear objectives and success measures that are aligned with other asset recovery measures, such as civil recovery and cash forfeited from criminals; reform the existing Asset Recovery Incentivisation Scheme, including tightening controls and introducing incentives for contributing to the new strategy™s objectives; and outline how orders should be prioritised for enforcement, including the use of˚specialist multi-agency teams. b HM Treasury should review the existing accountability arrangements, currently provided through the HM Courts & Tribunals Service trust statement, to re˚ect other bodies™ activity in imposing and enforcing orders . The current trust statement has increased accountability for con˜scation orders. However, this could be further improved with joint accountability by the bodies involved, including greater disclosure, for example on the number and value of cases enforced by bodies and transferred to HM Courts & Tribunals Service.

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Con˜scation orders Summary 9c All bodies involved in con˜scation should work with the Cabinet Of˜ce to review their process management, by doing the following :Address information gaps through data cleansing and establish how to most cost -effectively develop more sophisticated time, cost and performance data. This should also include conducting a ‚debt gap™ exercise to more thoroughly understand their debt, including what is realistically collectable, and how to prioritise resources. Consider the costŒbene˜t ratio of modernising case management, performance reporting and ICT systems so they are fully integrated to improve data sharing and reduce manual data entry. d Increase skills and knowledge in proceeds of crime by doing the following :Strengthen current training for law enforcement and the judiciary. This should include considering whether con˜scation hearings should be heard by judges with speci˜c expertise in this ˜eld. Identify resource gaps, for example in analytical skills and the capacity of prosecutors to handle caseloads. e Enforcement agencies, working with the Home Of˜ce, should review the effectiveness of current penalties, as part of strengthening enforcement powers and sanctions . They should also consider introducing wider criminal justice sanctions and powers, such as charging orders to seize property and community sentences.

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