Category: Press Releases

The press release issued by HM Treasury on 28 October 2003.

Detailed proposals for the Child Trust Fund (CTF) were published today.  As the Chancellor announced in Budget 2003, each child born on or after 1st September 2002 will receive an initial endowment of £250 rising to £500 for the poorest children – a reform which is progressive and universal, benefiting every child and with more to those who need help most.

Amongst the measures announced today are:

• The Government will make a further payment when children are seven years of age. The amount of this payment will be confirmed at a later date.
• Family and friends will be able to contribute up to £1200 a year between them to the fund.
• It will not be necessary to make a specific claim for the CTF – access will be through the child benefit system.
• Providers will be able to offer a variety of accounts. However all providers must offer a stakeholder account – a low cost risk-controlled equity account.
• All income and capital growth will be tax exempt.
• Special arrangements will be made for children in care.

The fund will help to build up a stock of assets for the young person to reinvest or use when they reach 18 years of age, giving them added security and opportunity in adulthood.  Financial education will also help individuals to make better financial choices throughout their lives.

Commenting on the proposals, Financial Secretary Ruth Kelly said:

“The Child Trust Fund will ensure that children will have assets of their own to help them get a better start to their adult life.  It is a leading example of the Government’s commitment to an active welfare strategy based on the principles of security, opportunity and responsibility for all.

“It will also give young people experience of savings and investment opportunities and help them to manage their finances better in later life.”

The press release issued by HM Treasury on 2 July 2003.

A major review of the organisations dealing with tax policy and administration was announced by Chancellor Gordon Brown today.

The review will report to Treasury Ministers and be chaired by Gus O’Donnell, Permanent Secretary to the Treasury working with the revenue departments and their Chairmen. It will examine the best organisational arrangements to achieve Government’s tax objectives both now and into the future.

Launching the Review, the Chancellor said:

“Since 1997, Inland Revenue and HM Customs & Excise have worked effectively with the Treasury to play a key role in support of this Government’s reforming agenda. Their record is one of success and a tribute to the staff of the revenue departments and to their Chairmen, Sir Nicholas and Sir Richard. The revenue departments do a first rate job and this review is intended to build on their success to ensure we make the best of the resources that we have.

“The primary focus of the review will be making public service delivery more effective and efficient. It will be conducted in discussion with unions and other stakeholders.”

Specific points the review will cover will include:

• ways to enhance service delivery to taxpayers and how these are most effectively ensured.  Inland Revenue and Customs & Excise together deliver some of the most important functions for the Government, for the public, and for the business community.  They have a very large number of customers in common.  The review will have a particular remit to examine whether, through closer working between the revenue departments or through organisational change, costs to honest taxpayers and compliance costs to businesses can be reduced;
• the coherence of administrative systems, including information and efficient use of resources across the broad area of tax administration taking into account future technological developments which will open new avenues for enhanced services;
• how best to ensure consistent and effective enforcement of the law against those who do not pay their fair share, particularly those who make a business out of cheating the tax system.  As part of this review we will examine work being done separately by the Government on the links between tax organisations and the law enforcement agencies;
• the most appropriate structure for delivering policy advice to Ministers.  Currently officials working on strategic tax policy questions are spread across three departments.  A more co-ordinated approach to fiscal policy advice is desirable, and the review will look at how we can best create a focus for tax policy work;
• a new framework for accountability for those working on tax, to set out more clearly the roles and responsibilities of all those involved.  Greater clarity will provide better certainty both for officials and Ministers.  The review currently being conducted by Gus O’Donnell which was announced in the Government’s response to the Fourth Report 2003 of the Treasury Select Committee will form part of this work.

The press release issued by HM Treasury on 7 July 2003.

A review looking into how Government can support regional and national  Museums more effectively was launched today by Chief Secretary to the Treasury Paul Boateng. The review aims to help museums and galleries acquire important works of art that might otherwise be sold abroad.

A consultation paper “Saving Art for the Nation” published today examines the existing taxation and funding arrangements which affect the ability of museums and galleries to acquire and display works of art and culture. The findings of the consultation will contribute to the review.

The Chief Secretary has asked Sir Nicholas Goodison who was until recently Chairman of the National Art Collections fund, to lead the review.

Paul Boateng said:

“The Government recognises the importance of ensuring that important works of art stay in the country so that we can all enjoy and learn from them. We already work closely with the arts world to ensure that where possible museums and galleries are able to display precious works of art. The review aims to ensure that the support on offer is practical, well-targeted and value for money.”

Estelle Morris, Minister for the Arts, supporting the review said:

“I welcome the launch of this review of support for acquisitions. DCMS is working to make progress and is looking forward to finding some practical solutions to prevent the loss of cultural objects that are important to this country.”

Sir Nicholas Goodison, said:

“Acquisitions refresh and enrich the public collections, which are a crucial part of our cultural life. I greatly welcome the Government’s wish to look at these subjects. I look forward to hearing everyone’s views.”

The press release issued by HM Treasury on 7 July 2003.

Further details on the key reviews that will form the backdrop to the next Spending Review were announced in the House of Commons today by Chancellor Gordon Brown.

The terms of reference for three reviews were announced today:

• The Devolving Decision Making Review which will examine how best to achieve decentralised delivery and responsive local and regional services. This will be done in a way that is consistent with equity and efficiency, and against a clear framework of national standards.
• The Childcare Review which will consider whether the long-term projection for childcare and early years education is sufficient to meet the Government’s aims for employment and educational attainment. It will look at how fast the sector can expand and what more needs to be done in particular areas such as childcare for school age children and the role of extended schools.
• The Child Poverty Review will set out what further action is required to halve child poverty by 2010 and eradicate it by 2020.  It aims to ensure the welfare system and the range of public services work together to avoid the waste and poor outcomes which still occur all too often. Among the specific issues it will look at are increasing employment opportunities; improving the effectiveness with which current investment in public services tackles material deprivation; improving life chances; and dealing with the crisis points that families often face, all with an eye to the particular issues facing families in deprived areas.

The Review of the Voluntary and Community Sector will focus specifically on five public service areas: Health and Social Care; Crime and Community Cohesion; Education and Employment; Housing and Homelessness; and Children and Families.  It will build on the foundations laid in last year’s Cross-Cutting Review of the Role of the Voluntary and Community Sector in Service Delivery and will make practical recommendations about specific areas where Government, the voluntary and community sector and social enterprise can work together even more closely to deliver world class public services.

The Chancellor also announced today that the first stage of the Review of Efficiency in Public Services will be completed later this month.  The Review examines new ways of providing Departments, their agencies and other parts of the public sector with incentives to exploit efficiency savings, and so release more resources for front line delivery. It will make proposals for strengthening the drivers of efficiency and offer examples of existing good practice in the wider public sector.  The Review will lay the basis for a continuing programme of work to improve efficiency.

Paymaster General Dawn Primarolo, will lead the Review of Financial Support for 16-19 year olds.  The review is examining the incentives for young people to participate in education and training and the interaction between this support and any new minimum wage for 16 and 17 year olds.  The review will look at ways of improving the system of financial support in order to increase young people’s participation in education and training and at ways to simplify the system radically in the long-term. The Paymaster General will work with children’s groups, the Local Government Association, the Low Pay Commission and in consultation with young people and their parents. It will report in spring 2004.

Sir Michael Lyon’s review on the scope for relocating public sector activities from London and the South East is conducting a public consultation on the impact of previous relocations and the economic effects of decentralization. In parallel Government Departments are preparing proposals for relocating activities and contributing to the Review.

In addition to the reviews that will feed into SR2004, Derek Wanless has been asked to provide an update on the long-term challenges in implementing the “fully engaged” scenario to improve population health as set out in his 2002 report. The terms of reference will be published in due course.

The press release issued by HM Treasury on 9 July 2003.

Raising skills levels will be central to the next Spending Review, announced Chancellor of the Exchequer Gordon Brown today.

Speaking at the launch of today’s National Skills Strategy, Gordon Brown said:

“That we have this morning leading industrialists, educationalists and Trades Unionists alongside a dozen Ministers, Cabinet Ministers and MPs is a testimony to the importance, not just of the Skills White Paper Charles Clarke is launching this morning, but a testament to the growing and central importance of education, training and skills to the whole future of the British economy.

“Entrenching stability and tackling excessively high levels of unemployment were the necessary starting points in 1997 of our strategy for growth and prosperity.

“Having made progress in entrenching stability and raising employment our national priority must be to ensure a flexible economy by raising skills levels.

“Only by becoming number one for our skills will our economy become number one for its success.

“Tomorrow, I will present to Parliament further measures for labour market flexibility, which alongside this new Skills Strategy, will aid the push towards our objective of full employment.  But everyone here knows already that skills – particularly in basic and intermediate qualifications – are, today the British Achilles’ heel, the most worrying inflexibility of all within our labour market and this is the first comprehensive strategy for years to tackle the problem.

“Today we find that there are almost 600,000 vacancies in the economy. The North East, which used to have few vacancies, has today over 10,000.

“There are not just vacancies in the South East but in every region. In Wales there are nearly 15,000, in the West Midlands 24,000, in Scotland over 25,000 and in the North West nearly 30,000.

“And in every region we are short of important skills today. While around 25 percent of the UK’s workforce have degree level skills, there are still 8 million men and women with low or no skills – 20 percent of 18 to 24 year olds.

“In some Local Authorities, nearly 100 per cent of 16 year olds are participating in education or training. In others – Salford, Milton Keynes, and Harrow – it is less than 70 per cent.

“Some Local Authority areas in our country have nearly 65 per cent of 16 year olds with 5 A*-C GCSE, others have less than 30 per cent.

“And we also need a step change in the skills of the 80 percent of those in today’s workforce will still be there in 2010.

“So as well as the new measures and the new partnership announced by Charles today:

• Including the entitlement to free training for anyone without a good foundation of employability skills;
• Targeted support for those at higher level skills such as technicians, to get the training they need;
• Better information, advice and guidance on skills, training and qualifications; and
• The new National Skills Alliance and regional devolution of skills budgets,

“We are extending the Employer Training Pilots from six to twelve areas, around a quarter of the country, offering incentives for firms to give their staff paid time off to train towards basic skills and NVQ Level 2.

“And with apprenticeships, which a few years ago were dying, already rising to 220,000, we today offer finance so that by 2004 over a quarter of young people aged between 16 and 22 will enjoy an apprenticeship with even more benefiting by the end of the decade, giving every young person who works hard and tries hard the chance of an apprenticeship or college or university.

“I can say today with certainty that skills are going to be central to the next Spending Review and I look forward to continuing to work closely with Charles Clarke, Andrew Smith and Patricia Hewitt, as well as with all of you here, from CBI, TUC, Small Business Council – central and local government, employers and employees as we take this strategy forward.”

The press release issued by HM Treasury on 10 July 2003.

A consultation on improving the definition of research and development (R&D) for tax credit purposes was published today by Chancellor Gordon Brown. ‘Defining Innovation’ will ensure that the definition is up to date,  technologically consistent and internationally competitive.

Chancellor Gordon Brown said:

“The Government introduced R&D tax credits in recognition of the importance of innovation for driving up the UK’s productivity.  They have been welcomed by businesses because they provide a real incentive for additional R&D spending. We now intend to build on the success of R&D tax credits by ensuring that the definition of R&D provides businesses with the clarity and certainty they need.”

Patricia Hewitt, Secretary of State for Trade and Industry said:

“R&D is vital to firms’ survival and growth. Innovations in production processes and the development of new or improved products and services can cut costs, improve quality and win orders. R&D tax credits have a key role to play and it is essential that companies understand which activities will qualify, so that they can more effectively plan their investment in R&D.”

Since the R&D tax credits were introduced – in 2000 for small and medium-sized companies and 2002 for large companies – the Government has worked closely with businesses and their representatives to make sure the operation of the tax credits scheme is as straightforward as possible. An improved definition of R&D will help companies understand the likely benefit of the credit at an early stage in their R&D planning their R&D activities, giving them greater investment certainty.

‘Defining Innovation’ consults on:

• rewriting the current definition of R&D for tax purposes, published by the DTI, so as to provide greater clarity and certainty for companies;
• exploring areas where the definition might be extended, such as design, to take account of the full range of innovative activities carried on by companies; and
• providing greater certainty over what constitutes ‘consumable stores’ for tax credit purposes; the extension of the credits to include expenditure on licences for advanced software; and the definition of  ‘qualifying bodies’ (to which large companies can subcontract R&D).

The R&D tax credit is an integral part of the Government’s strategy to improve productivity growth in the UK. The consultation on the definition of R&D will complement broader policy development to support innovation and growth by UK business, including the Lambert Review on business-university collaboration, and the DTI Innovation Review. These will both report by the autumn.

Through the R&D tax credit and other policy measures, the Government can help create a supportive framework for business. But it can only deliver its innovation goals for the UK by working with businesses investing in research, technology and the skills needed to generate productivity gains. To raise the profile of R&D skills and careers and provide a link between policy initiatives, such as the R&D tax credit, and business, the Government will support the creation of an R&D Employers Forum by this autumn, as recommended by Sir Gareth Roberts in his 2002 review of science, engineering and technology skills.

The press release issued by HM Treasury on 14 July 2003.

Paul Boateng, Chief Secretary to the Treasury, today welcomed the appointment of John Tiner as the new Chief Executive Officer of the Financial Services Authority, and confirmed his appointment to the FSA Board in this capacity.

Mr Tiner, who is currently Managing Director, Consumer, Investment and Insurance at the FSA, will take up post as CEO on 22 September 2003.

Welcoming the appointment Mr Boateng said:

“I am pleased with the appointment of John Tiner as Chief Executive of the FSA.  His extensive knowledge and experience of the financial services market will be invaluable.  His expertise in regulatory regimes will be particularly important when the FSA assumes responsibility for general insurance and mortgages next year.”

John Tiner will be the first Chief Executive Officer of the FSA following the Government’s decision to split the roles of Chairman and Chief Executive.  Callum McCarthy, who replaces Sir Howard Davies as Chairman, also takes up his post on 22 September 2003.

The press release issued by HM Treasury on 14 July 2003.

The links between universities and industry are increasing, especially in some research driven sectors, but there is room for improvement, according to Richard Lambert, who has today published a  summary of the consultation responses and the issues raised in his review of business-university collaboration.

Richard Lambert said, “I have been impressed by the efforts that the universities have madeover the last 10 years to disseminate as well as to create knowledge. In some respects the business side is less impressive – apart from the pharmaceutical and aerospace sectors, there are relatively few research intensive businesses located in the UK. This translates into weak demand for the knowledge created in universities. The question is what can be done to encourage more businesses to collaborate with universities.”

A number of positive messages emerged from the consultation. It is clear that the amount of collaboration is increasing and that government funding for knowledge transfer activity in universities – so called “third stream funding” – has generated a marked culture change in universities and has built up their capacity to transfer knowledge. However there are a number of areas where further progress could be made, including:

• Stronger engagement from business – particularly small and medium sized businesses, which often do not collaborate with universities but who could benefit significantly from collaboration. A number of universities commented on the difficulties that they face in engaging with SMEs.
• Greater clarity over intellectual property – many respondents commented that negotiations over intellectual property and overhead costs could be a major sticking point. There appears to be a lack of clarity about intellectual property ownership in the UK, but equally a lack of consensus about what to do about it.
• Improved skills and experience in some technology transfer offices – UK universities are generally much less experienced at technology transfer than their US counterparts. Many UK universities have set up technology transfer offices but their performance is mixed – some are first rate while others are less impressive. There is also a sense that there has been an over-emphasis on spinning out new companies in the UK rather than licensing to existing ones.
• Better financial incentives for collaboration – many respondents commented that the Research Assessment Exercise is a significant barrier to collaboration, that academics are not sufficiently incentivised and rewarded for collaboration with industry and that the current funding streams do not promote enough multi-disciplinary research. Universities have asked for an increase in and greater certainty about future third stream funding levels and a move away from the competitive bidding process.
• Improved university management and governance – a number of businesses have reported difficulties in dealing with some universities and expressed a desire for university governance structures to be modernised.
• A better dialogue between businesses and the universities about the UK’s future skill needs – a number of respondents commented on the lack of an effective mechanism for business to influence the courses and teaching on offer at universities.
• A greater role for the RDAs in brokering relationships between business and universities – universities have an increasingly important role to play in their regional and national economies and in providing graduates with the skills that the economy needs. RDAs have a key part to play in linking them with their local businesses.

Richard Lambert said, “I think that the big question is whether there is scope to manage universities in a different way – for the Government to specify some measures of success, which if met by the universities would mean that they could be given greater freedoms to behave in a more entrepreneurial way.”

The review will be examining these issues in more detail over the next few months and will submit its final report, with case studies and recommendations, to the Government in October 2003.

The press release issued by HM Treasury on 15 July 2003.

Detailed proposals for simple low-cost investment products, with a lighter-touch sales process were announced by the Government today, following an open consultation earlier this year.

These products, to be known as ‘stakeholder’ products, will address the basic needs of savers and are particularly aimed on those on lower incomes. They will go on sale in 2005. The proposals follow on from Ron Sandler’s recommendations published in his review of the retail savings market.

A suite of three products will be introduced:

• A short-term investment product. The existing CAT standard cash ISA will become part of the stakeholder suite.
• A medium-term investment product. There will be two investment options, both with a maximum equity exposure of 60% of the fund’s value:

• A long-term investment product. The existing stakeholder pension will become part of the suite. There will be a requirement for the default fund to be lifestyled, whereby assets in the fund are gradually moved from equities towards fixed income as the policyholder nears retirement. DWP will be discussing the detail of the default requirement with stakeholder providers during the summer and will consult on draft regulation in early 2004.

The Government is also committed to making the Child Trust Fund (CTF) available within the stakeholder product suite. Further details will be set out in the September 2003 CTF publication.

The Government agrees with Ron Sandler’s recommendation that a price cap is an essential component of these regulated products in a market that is characterised by lack of price competition and consumer weakness. The level of the cap will be set later this year when the FSA market research into the sales process is completed.

Announcing the Government’s decisions Financial Secretary to the Treasury Ruth Kelly said:

“Many people worry about financing their future but find it difficult to make the right decisions when faced with a vast array of complex investment products. Stakeholder products aim to overcome this problem by being flexible, simple, low-cost and risk controlled. They will help many more people, particularly the less well-off, share in the benefits of investment and better plan for their future.

“It was clear from the responses to the consultation and our own analysis that the most sensible time to finalise the price cap is when the results of the FSA work on the sales process is known. In an ideal market there would be no need for a price cap but the lack of competition and complexity of the financial services industry make one necessary.

“There has been a positive and constructive response from industry and consumer organisations to the consultation.  As well as delivering consumer benefits stakeholder products should help the industry overcome the lack of trust that many people currently have in it. The Government will continue to work closely with all parties to ensure there is a smooth introduction of the products.”

Pensions Minister Malcolm Wicks said:

“The stakeholder pension will be an integral part of the suite of stakeholder products continuing to offer a wide range of investment options. It can now provide added security for people as the default fund will now have to include lifestyling, which gradually moves investments towards a fixed income as the customer approaches retirement.

“All stakeholder pensions schemes will be required to provide this safeguard and we will be working closely with stakeholder providers on the detail of this provision to ensure that the switch to the new requirements is as straightforward as possible”

The press release issued by HM Treasury on 15 July 2003.

1. The starting point for my Review was an examination of the way HMCE operated in the field of investigation and prosecution of serious crime, in particular excise diversion fraud, in the mid to late 1990s. The first three chapters of the Report seek to set the background to the way HMCE operated in law enforcement, explain the circumstances in which excise diversion frauds took place and provide an account of excise diversion fraud emanating from London City Bond between 1995 and 1998. Chapters Four and Five contain a detailed summary of the events surrounding a number of trials which were heard between the autumn of 1998 and 2001 concerning allegations of excise diversion fraud centred on London City Bond, and the subsequent successful appeals against conviction which resulted in orders for retrials. In Chapter Six I provide a detailed account of the evidence given at the hearing before Mr Justice Grigson in Liverpool, the early termination of which led directly to the commissioning of my Review.

2. One allegation raised in the Liverpool hearings which has attracted considerable publicity is whether HMCE incited the commission of criminal offences at London City Bond so as improperly to entrap defendants or those from whom they obtained diverted goods. I found no evidence that officers of HMCE or any employee of London City Bond incited or persuaded any trader to commit fraud, or that they actively encouraged crime which would not otherwise have been committed. A full account of my findings on this issue is to be found in the commentary on the collapse of the Liverpool hearings in Chapter Six.

3.  I have also examined the linked case of Operation Stockade which Ministers referred to me subsequently. That trial, the appeal, and other later proceedings are considered in Chapter Seven. In subsequent chapters I analyse the problems arising in the investigation and prosecution of the London City Bond cases, what changes have been put in place since those events, and what further changes are required.

4. It is clear that a number of things went badly wrong.  I cover this in more detail in Chapter Eight. The issues I identify include the absence of a strategic approach to excise diversion frauds; poor communications; serious deficiencies in the handling of informants; and failure to comply with disclosure obligations.

5. But the London City Bond events took place in the mid to late 1990s and they must be seen in perspective.  Since those events there have been four independent reviews other than my own.  There have been significant changes in the external environment, including statutory changes, and major alterations in the way HMCE is structured and managed, including a much clearer strategic direction for the whole organisation.  I deal with these changes in Chapter Nine.

6. One of the most striking differences in recent years is the increase in the size and complexity of many of the cases investigated and prosecuted by HMCE.  HMCE do not walk alone in this changed environment.  Similar changes have been experienced by other investigators and prosecutors.  Many major cases investigated and prosecuted by HMCE fall squarely within the definition of serious and organised crime.  They often involve long and complex investigations whose tentacles extend widely and sometimes link with investigations being conducted by other agencies.  The investigations generate huge quantities of paper which have to be processed and managed.  HMCE also deals with a large number of less complicated cases which generally proceed relatively satisfactorily through the criminal justice system.  The statistics for HMCE prosecutions demonstrate that they are an organisation which enjoys considerable success in investigating and prosecuting less serious crime which falls within its remit.

7. HMCE is a many-faceted organisation.  It is a tax collection agency and a frontier control agency, as well as a law enforcement agency.  I accept that this does mean some issues are more complex for HMCE than they might be, for example, for some police forces and prosecuting authorities.  Nevertheless, HMCE is an important part of the law enforcement community and it is in the public interest for it to be as effective as possible, and equally importantly for it to be seen to be effective.  In examining the impact of the changes that have taken place within HMCE since the events of London City Bond I have borne these points very much in mind.  However, one of the things that has struck me most forcibly during the course of this Review is the negative perception of HMCE within the criminal justice community in particular; and the fact that perception and reality are somewhat out of step.  One investigator to whom I spoke said:  “The most valuable thing that we have lost is our reputation”.  I agree.  I will not repeat what is said elsewhere in the Report, in particular in Chapter Nine, but I am very clear that the perception issue is one that can only be addressed by radical action.

8. Ministers, and senior management at HMCE, are understandably anxious to “draw a line in the sand” so that the events of the London City Bond cases can be put behind them and they can move forward unencumbered by the detritus of the past.  I understand that anxiety.

9. It is often said that the most important asset of an organisation is its staff.  That is no less true of HMCE than elsewhere.  Those staff I saw welcomed the Review as necessary, recognised the perception problems and appreciated the greater strategic direction they were receiving.  Amongst them I detected no lack of integrity or commitment to the change process.  In many I saw a deep-seated desire to regain their reputation so that they were able to operate in an atmosphere where their word was trusted by both the courts and those representing defendants.  I have no doubt that these views are widely shared by staff at all levels within HMCE.

10. To be an effective organisation the staff need leadership, management and a culture and systems that foster and reward integrity, high standards and professionalism.  I am satisfied that much of the necessary ground work has been done and that personnel and machinery has been, or is being put in place to achieve the changes HMCE need to make. There is much that is good and some that is excellent within the present department.  But the task is not yet complete and in some areas there is a considerable distance yet to travel.  I agree that HMCE should now put the events of the London City Bond cases behind them and move forward, but not in a spirit of complacency.  I cannot give an unqualified assurance that all is now well.  The recommendations I make are designed to reinforce the change process, and in some cases to accelerate it or take it in a slightly different direction.

11. My detailed analysis of the further changes required, along with recommendations, can be found in Chapters 10, 11 and 12.  A summary is given below.  For most people my most significant recommendation so far as HMCE itself is concerned will be that HMCE should continue to have a separate role as an investigating force; and so far as the Solicitor’s Office is concerned, that there should be a complete separation of the prosecuting function for HMCE’s criminal cases from the organisation itself, through the creation of a separate prosecuting authority.  I realise this will be regarded by some as a far-reaching step, but my researches show that only a radical move such as this is likely to be sufficient for HMCE to overcome the negative perceptions that exist within the criminal justice system.  An associated recommendation is that the investigators should be provided with more dedicated expert legal advice to help improve the quality of cases that reach the new prosecuting authority.

12. In Chapter 12 I consider a number of criminal justice issues which have been thrown into prominence by the facts surrounding the London City Bond cases.  These all have wider application than simply to HMCE.  No one could claim that our criminal justice system works as effectively as it should.  I have been particularly struck in the London City Bond cases by the considerable emphasis given to attacks on the process by which cases were investigated; and by the challenges facing prosecutors in these large and complex cases in meeting the demands of the Criminal Procedure and Investigations Act.  I make recommendations in both these areas.  I have also examined, and made separate recommendations on, the operation of the Regulation of Investigatory Powers Act 2000.

Summary of recommendations

Law enforcement

(i) I have considered carefully whether HMCE should retain its role as an independent investigating force.  I have concluded that it should.  I believe that any organisational change to remove HMCE’s investigation role would hinder the progress that has already made to put right what has gone wrong.  It might also hinder the fight against serious and organised crime.  (Paras 10.1 to 10.16.)

(ii) I make three recommendations about the handling of human sources of information.  In so doing I have considered the statutory regime provided by the Regulation of Investigatory Powers Act 2000, and the action that HMCE has taken to comply with that regime.  My recommendations are:

a. The proposed new procedures for handling and managing human sources are implemented as a matter of urgency and that clear guidance is issued to all law enforcement officers about their responsibilities under the regime.  (Chapter 10 para 95.)

b. When the proposed new procedures for handling and managing human sources are implemented, consideration should be given to putting in place a system which ensures that all those who deal at any level with any source keep records in a durable and retrievable form, compliant in all respects with the Paragraph 3 contents requirements of the Regulation of Investigatory Powers (Source Records) Regulations 2000 (Chapter 10 para 100.)

c. Consideration is given to expanding the role of the SMUs and the NSU in the control and management of all human sources of intelligence posing potential risk (Chapter 10 para 104.).

iii. It is of considerable importance that investigators are both well trained, and regularly trained.  In the course of my Review I have found deficiencies, particularly in the regularity of training provided.  The basic training provided to investigators is reasonably thorough and comprehensive and is regularly updated.  However, subsequent training is somewhat ad hoc and not systematic.  I have not been prescriptive about the solution, but have recommended that HMCE give consideration to the following:

a. Regular refresher training for investigators every five years.

b. Specific training geared to particular key jobs within investigation, to include a written test before an officer is allowed to take up the new post.

c. Training to reflect changes in the criminal justice system.  (Chapter 10 para 115.)

iv. Customs investigators are not currently subject to systematic external scrutiny.  I believe they should be.  This would be of benefit to them internally; and would also contribute to improving the perceptions of HMCE held by those outside the department.  I have suggested that:

A separate study is undertaken with a view to identifying how additional external scrutiny can best be introduced into HMCE investigation work.  The review might start with looking at how the existing professional standards team could be enhanced and its reputation reinforced through external input.  But a review should not necessarily confine itself to that limited scope.  (Chapter 10 para 128.)

v. As part of the recognition by senior management at HMCE that there were serious problems which had to be tackled, a number of quality and management assurance systems have been introduced since the mid-1990s.  Whilst I welcome that development, I do have some concerns that there may be too many and that some rationalisation would be of benefit.  I have recommended:

That a review should be established to examine the full range of new assurance systems put in place in law enforcement since the events of the late 1990s; and that HMCE practice should be compared with that in the Police and other investigators, with a view to streamlining, where possible, the number of assurance systems in place whilst ensuring that HMCE are fully able to comply with the requirements on them as a professional investigating force.  (Chapter 10 para 133.)

vi. I have spent a little time looking at the way Customs is structured.  It is a UK-wide organisation with a regional structure.  I have made one general recommendation here and two which apply particularly to Scotland.  There is a separate legal system in Scotland and it is important that investigators identify at an early stage of their investigations whether any subsequent prosecution is to take place in Scotland, or elsewhere in the United Kingdom.  It is also important that Customs staff have available to them dedicated expert advice about the Scottish legal system.  With all these issues in mind I have made the following recommendations:

a. That HMCE management keep the issues of regional organisation under review to ensure that it best fits the needs of the organisation.  (Chapter 10 para 138.)

b. That arrangements are put in place to provide specialist qualified legal advice for the investigators and intelligence officers operating in Scotland.  (Chapter 10 para 152.)

c. That a system  is put in place to ensure, so far as possible, that an early decision is taken in each investigation with a Scottish dimension as to whether the legal requirements of the Scottish system  should be applied.  Such a decision would be case specific.  (Chapter 10 para 154.)

Solicitor’s Office

vii. The structure of the Solicitor’s Office has been subject to considerable change over the last few years, most recently as a result of the Gower/Hammond Review (see Chapter Nine and Appendix Six).  These changes have rightly been directed towards increasing the independence of the prosecuting lawyers within the Office so that they can more easily and perceptibly exercise their role as prosecutors.  I welcome the changes that have been made and recognise that the effect of those changes is being felt.  However, I have concluded that these changes do not go far enough.  Prosecuting solicitors at HMCE must be in a position where they are able to exercise their “minister of justice” role without fear or favour; and as importantly they must be seen by others as in a position to do this.  I have concluded that a vital element in restoring confidence in HMCE within the criminal justice system is the assurance that prosecutions are conducted by lawyers who are wholly independent.  I have therefore recommended that:

The Solicitor should no longer retain any responsibility for prosecutions brought by Customs & Excise.  All prosecuting functions should be removed from the Customs & Excise Solicitor’s Office and prosecutions conducted by a separate prosecuting authority.  (Chapter 11 para 14.)

viii. I have also made what I consider to be complementary recommendations to the above.  There has now been in existence for some time a small corps of what are known as Investigation Legal Advisers.  These are lawyers who are dedicated to providing advice to investigators pre-knock – that is to say before any criminal proceedings are commenced.  I welcome this development; but believe that more is needed, both in terms of additional lawyers and their greater use by the investigators.  This should improve the quality of cases which are presented to the new prosecution authority and ensure that the investigators receive regular and professional legal advice.  My detailed recommendations are:

a. The number of ILAs should be substantially increased to enable the objectives of Customs identified in paragraph 11.36 to be achieved (the appointment of an ILA at the outset of all sensitive, complex or substantial investigations)

b. ILAs should continue to have no part in the prosecution process.

c. The CPS Inspectorate should inspect and report on the ILAs to give an assurance as to the quality of their work.

d. Consideration is given to the transfer of responsibility for the ILAs to the Economic Secretary to the Treasury.

e. A review is conducted of the procedures for the recording and retention of advice given by the ILAs in the course of investigations, and the assurance of the quality of that advice given.  (Chapter 11 para 58.)

ix. Another welcome development since the Gower/Hammond review has been the introduction of independent inspection of the Prosecution Office by Her Majesty’s Crown Prosecution Service Inspectorate.  I believe the work already done should be built on and my recommendations are as follows:

a. HMCPSI be given a clear and defined role in inspection and assuring the new prosecution organisation.

b. This relationship should ideally be placed on a  statutory basis.

c. Specific and adequate resources are made available to HMCPSI for this purpose.

d. If appropriate, and this will depend on whether the Prosecutions Office remains part of Customs, joint inspection should be undertaken involving HM Customs & Excise internal assurance division and HMCPSI.

e. As part of the further definition of HMCPSI’s role, it should specifically have the function of quality assuring the work of and advice given by the Investigation Legal Advisersn.  (Chapter 11 para 76.)

x. HMCE is a major prosecutor in both the Crown Court and the Magistrates’ Court.  As such I think HMCE representatives should be more systematically involved with the Court Service and with other players in the criminal justice system.  I make the following recommendation to that effect.

I consider that more regular and systematic dialogue between, for example, HMCE and the Court Service on practical issues, and HMCE and the Home Office on policy issues, would be a profitable and fruitful development for all involved.  I recommend that the Head of the new Prosecuting Authority takes the lead in putting suitable arrangements in place.  (Chapter 11 para 80.)

Criminal Justice System

xi. I have spent some time considering, and discussing with a number of practitioners, how the current disclosure regime operates in cases of the size and complexity of the London City Bond cases.  I do not believe the system works satisfactorily and neither do any of the judges or practitioners to whom I have spoken.  I am aware that the Government is presently making changes to that regime through the Criminal Justice Bill now before Parliament.  I hope that those changes are sufficient to address the problems prosecutors have in determining what is relevant against wholly inadequate defence case statement.  If those measures do not achieve the desired outcome, I make the following recommendation:

That if appropriate the disclosure regime is reconsidered and consideration given to effecting secondary disclosure by providing to the defence the schedule of non-sensitive material held or inspected by the prosecutor in connection with the case for the prosecution against the accused and permission granted to the defence to inspect any material so disclosed that appeared relevant.  (Chapter 12 para 48.)

xii. One of the striking features about many of the London City Bond cases was the extent of the attacks by the defence on process issues.  Whilst it is vital that the defence has the ability to raise issues of abuse of process, it is clear that a significant number of applications are ill-founded and take up extensive, disproportionate and valuable court time.  Although a Practice Direction already exists, its provisions are not universally followed.  I have therefore recommended that:

Consideration be given by the new Criminal Rules Procedure Committee to the introduction of rules, or alternatively issuing by the Lord Chief Justice of practice directions, giving judges greater power to control the proceedings before them on all applications in criminal proceedings to be determined by the judge alone.  (Chapter 12 para 77.)

xiii. Finally I have considered another aspect of the Regulation of Investigatory Powers Act 2000:  the sections dealing with interception of communications.  I believe there is a lacuna in the present regime so that where all intercepted material has been destroyed there is no procedure for the prosecutor to be assured that nothing the interceptors have heard underlines the prosecution case or assists the defence.  In the light of that I recommend that:

a. Consideration is given to amending the Code of Practice [issued pursuant to Section 17 of the Regulation of Investigatory Powers Act 2000] to make provision for the assurance of the prosecutor where all intercepted material has been destroyed.  (Chapter 12 para 115.)

It has also become apparent that many judges do not have sufficiently regular experience of cases involving intercept evidence necessarily to be fully acquainted with all the implications of RIPA.  I therefore additionally recommend that:

b. Consideration is given to including the topic (RIPA Part 1) within the syllabus of the Judicial Studies Board refresher course on criminal law.  (Chapter 12 para 117.)