Clarke targets compensation as 'massive industry for lawyers'
Campaigners enraged by proposed curbs on 'undeserved' awards
Alan Travis
Thursday April 20, 2006
Guardian
Charles Clarke underlined his personal contempt for the adversarial system of criminal justice in British courts when he revealed a series of controversial plans which have enraged miscarriage of justice campaigners.
The home secretary made it clear that he wants to put a stop to a "massive industry for the legal profession that has been giving away large amounts of money to individuals who do not deserve it".
He also criticised highly paid barristers on legal aid who pursued compensation claims to an unacceptable extent. The measures include:
Quashing convictions
Mr Clarke claims the backing of Lord Justice Auld's 2001 inquiry into the operation of the criminal courts for his proposal to ensure that a conviction is not quashed by the court of appeal simply because of an "error in the trial" or a technicality.
The home secretary said he had started an urgent review of the statutory test that the appeal court must use in deciding whether to quash a conviction.
He made it clear that one possible option was the introduction for appeal court cases only of the Scottish verdict of "not proven": "It would be a big change. It would be a radical change. The time has come to assess it."
Lord Justice Auld recommended the change in 2001, arguing it had come to the point where many people believed serious failures of due process should result in an acquittal whatever their effect on the safety of a conviction.
Compensation
The package of changes to the compensation scheme for victims of miscarriages of justice will save about £5m a year out of a total annual bill of £8m. Some will have immediate effect. The government will no longer pay compensation above what is required by international obligations and so has now closed its discretionary payment scheme.
In one case under the discretionary scheme cited by Mr Clarke, a man convicted of smuggling offences for which he was fined and ordered to pay costs was awarded a seven-figure sum even though he had not even been to prison.
The statutory scheme paying out the minimum required by international obligations will continue and claimants will have the right to sue in the civil courts for compensation. Time limits are to be introduced for all applications.
The average time taken to settle cases has now reached more than three years, with five cases having taken more than 10 years to resolve.
Legislation
Mr Clarke is to introduce legislation capping the maximum award at £500,000 under the scheme, plus compensation for loss of earnings. Payments have increased sharply in recent years, with the average now more than £250,000 and with more than 10% paid in legal fees. In one unidentified case more than £2.1m was paid out. A limit is also to be placed on the amount of legal aid available in such cases. Earnings compensation will be limited to one and half times gross average industrial earnings.
Deductions
The government will further limit the compensation payments made by giving an independent assessor the power to make deductions to take account of other convictions and the defendant's behaviour during the trial. In exceptional cases the compensation could be reduced to nil because of criminal convictions or the defendant's failure to be helpful in court.
Case studies
Birmingham Six Paddy Hill, who was released 15 years ago after serving 16 years in prison following his wrongful conviction for IRA bomb attacks in the 1970s, was offered a "final settlement" of £960,000 in 2000. He then faced a deduction of £50,000 after being charged for bed and board during his years behind bars.
Michael and Vincent Hickey Received compensation payments of £990,000 and £506,000 after wrongfully spending almost 20 years in prison for the murder of the paper boy Carl Bridgewater. Their convictions were quashed in 1997 but it took a six-year battle for them to get their compensation payments. The Home Office independent assessor, Lord Brennan, knocked 20% off Michael Hickey's award and 25% off Vincent Hickey's because of their criminal records. They also faced £60,000 deductions to cover the cost of board and lodging while they were in prison.
Winston Silcott He was awarded £50,000 compensation after being wrongly convicted of murdering PC Keith Blakelock, 40, who was hacked to death by a mob during the Broadwater Farm riots in Tottenham, north London, 20 years ago. Silcott was one of three men convicted of the police officer's killing but the conviction was overturned on appeal in 1991. At the time his award was confirmed Silcott was serving life for murdering a boxer at a party in 1984, the year before PC Blakelock was killed.

Wrongful conviction payouts to be cut by £5m
By Ben Russell, Political Correspondent
Published: 20 April 2006
Compensation for miscarriages of justice is to be cut by £5m a year under plans to curb payments to people with previous convictions or those who do not co-operate with the legal system.
Charles Clarke, the Home Secretary, floated the idea of a new verdict of " not proven" in appeal cases as part of an urgent review of the legal test used to quash a conviction. He wanted to cut the number of people acquitted on "technicalities".
Under plans announced yesterday, compensation for wrongful convictions would be capped at £500,000, compared with the record payout of £2.1m, to bring payments in line with those for victims of crime. Last year payments totalled around £8m. Mr Clarke said he would scrap a discretionary compensation scheme that pays out £2m a year and place curbs on the statutory scheme.He said that the current system bred "cynicism". He cited the case of a man convicted of sexual offences against children, who was paid £10,000 in compensation when offences against one child were quashed on appeal, even though other convictions stood.
But Gerry Conlon, one of the Guildford Four, who were wrongly imprisoned for an IRA bombing in 1974, said he was "absolutely horrified". He said Charles Clarke should "cut the pensions of the forensic scientists, the police officers, who have lied or contaminated or fabricated evidence".
Bill Bache, solicitor for Angela Cannings, cleared by the Court of Appeal of killing her sons after 18 months in prison, told the BBC: "An innocent person who suffered a wrongful conviction is just as entitled to compensation as the victim of a mugger."
David Davis, the shadow Home Secretary, added: "This seems an extraordinary reflection of the values of this Government. It is a longstanding principle that compensation should be paid to those who have been wrongly imprisoned."
The Home Secretary acknowledged that any reform would be controversia but the system needed change.
Miscarriages of justice
* As one of the Birmingham Six, Paddy Hill's case was a celebrated example of a miscarriage of justice. Mr Hill, 62, was released from jail 15 years ago after serving 16 years in prison. He was offered about £1m, although he was charged £50,000 for bed and board for his time in jail. Compensation will now be capped at £500,000.
* In 2002, Angela Cannings was wrongly convicted of killing her son Jason in 1991 and son Michael in 1997. She was given a life sentence but, after spending 18 months in jail, her sentence was overturned. Last year, the Home Office announced she would receive compensation. Charles Clarke's new plans would limit future payouts.
Compensation for miscarriages of justice is to be cut by £5m a year under plans to curb payments to people with previous convictions or those who do not co-operate with the legal system.
Charles Clarke, the Home Secretary, floated the idea of a new verdict of " not proven" in appeal cases as part of an urgent review of the legal test used to quash a conviction. He wanted to cut the number of people acquitted on "technicalities".
Under plans announced yesterday, compensation for wrongful convictions would be capped at £500,000, compared with the record payout of £2.1m, to bring payments in line with those for victims of crime. Last year payments totalled around £8m. Mr Clarke said he would scrap a discretionary compensation scheme that pays out £2m a year and place curbs on the statutory scheme.He said that the current system bred "cynicism". He cited the case of a man convicted of sexual offences against children, who was paid £10,000 in compensation when offences against one child were quashed on appeal, even though other convictions stood.
But Gerry Conlon, one of the Guildford Four, who were wrongly imprisoned for an IRA bombing in 1974, said he was "absolutely horrified". He said Charles Clarke should "cut the pensions of the forensic scientists, the police officers, who have lied or contaminated or fabricated evidence".
Bill Bache, solicitor for Angela Cannings, cleared by the Court of Appeal of killing her sons after 18 months in prison, told the BBC: "An innocent person who suffered a wrongful conviction is just as entitled to compensation as the victim of a mugger."
David Davis, the shadow Home Secretary, added: "This seems an extraordinary reflection of the values of this Government. It is a longstanding principle that compensation should be paid to those who have been wrongly imprisoned."
The Home Secretary acknowledged that any reform would be controversia but the system needed change.
Miscarriages of justice
* As one of the Birmingham Six, Paddy Hill's case was a celebrated example of a miscarriage of justice. Mr Hill, 62, was released from jail 15 years ago after serving 16 years in prison. He was offered about £1m, although he was charged £50,000 for bed and board for his time in jail. Compensation will now be capped at £500,000.
* In 2002, Angela Cannings was wrongly convicted of killing her son Jason in 1991 and son Michael in 1997. She was given a life sentence but, after spending 18 months in jail, her sentence was overturned. Last year, the Home Office announced she would receive compensation. Charles Clarke's new plans would limit future payouts

£5m cut from miscarriage of justice payments
By David Barrett, PA
Published: 19 April 2006
Compensation payments to people wrongly convicted of crimes are to be slashed by a total of £5 million a year, the Home Secretary Charles Clarke said today.
Individual awards will be capped at £500,000 - the same as the maximum amount paid to victims of crime - compared with the previous highest payout of £2.1 million.
Mr Clarke announced a highly significant ministerial review of the legal test currently used by the Court of Appeal to quash criminal convictions.
It will examine to what extent an error in the trial process necessarily leads to a miscarriage of justice, said a Home Office spokesman.
Mr Clarke described the move as an "urgent review" which could lead to a change in the law.
A discretionary compensation scheme set up by the former home secretary Douglas Hurd in 1985 will be scrapped immediately, Mr Clarke said. That scheme paid out £2 million a year.
A statutory scheme which currently pays out £6 million a year will remain in force but a number of new limitations will be placed on claimants.
Mr Clarke said he planned to bring in new laws so that compensation could be reduced to zero because of previous criminal convictions or other conduct by the applicant.
Scrapping the discretionary scheme means people who have been wrongly convicted will not be able to apply for compensation if their cases have been quashed while going through the normal appeal process.
Instead they will have to sue for compensation through the civil courts.
Mr Clarke said: "The changes I have announced today will create a fairer, simpler and speedier system for compensating miscarriages of justice.
"I am scrapping the discretionary scheme which has become increasingly anomalous and I do not believe that this can continue to be justified.
"These changes will save more than £5 million a year which we will plough back into improving criminal justice and support for victims of crime. "
On the review of the Court of Appeal test, Mr Clarke said: "I have embarked on an urgent review, with the Lord Chancellor and Attorney General, of the statutory test the Court of Appeal must use in deciding whether to quash a conviction.
"I propose to examine whether and if so to what extent an error in the trial process necessarily means a miscarriage of justice.
"I will consult upon the results of this review as soon as possible.
"If a change in the law is needed, we will propose it."
A review of this kind was previously recommended by Lord Justice Auld.
Average final awards for wrongful conviction have increased from about £170,000 in 2003-4 to more than £250,000 in 2005-6, according to Home Office figures. The highest award was £2.1 million.
In comparison the average award to a victim of crime is just £5,000.
Mr Clarke said he wanted the review to ensure the court process was based on what suspects did or did not commit, rather than the "technicalities" of the legal system.
The Home Secretary has repeatedly stated his dislike of the adversarial system which operates in British courts, and backed the continental-style inquisitorial system instead.
"I think the more the legal system clearly relates to the conduct of individuals who have done things or have not done things and the less it relates to the technicalities of the legal process the better it is for the transparency of the legal system as a whole," Mr Clarke said.
"What individuals want to see is a legal system which correctly finds guilty those who are guilty of an offence and acquits those who are innocent, with respect to what they did or didn't do rather than respect to whether the legal process was or was not correctly followed.
"I think getting a system which is more transparent than that is genuinely beneficial."
Lord Justice Auld proposed allowing the court of appeal to come back with a "not proven" verdict, similar to the option available under Scottish law.
Mr Clarke said: "What I think individuals want to see is a situation where the court at all levels could properly assess the likelihood of an individual who is charged with a crime."
Mr Clarke confirmed that one possible option could be to extend the not proven verdict to courts in England and Wales.
"We are going to have a look at it," he said.
"It would be a big change. It would be a radical change.
"The time has come to assess it."
But he stressed that no conclusions had yet been reached.
Sally Ireland, of human rights group Justice, said: "Like victims of crime, victims of miscarriages of justice can suffer terrible losses.
"This plan smacks of robbing Peter to pay Paul.
"To disqualify people who may have spent many months in custody from the scheme is a cynical attack on people who have already suffered enough at the hands of the state."
Compensation payments to people wrongly convicted of crimes are to be slashed by a total of £5 million a year, the Home Secretary Charles Clarke said today.
Individual awards will be capped at £500,000 - the same as the maximum amount paid to victims of crime - compared with the previous highest payout of £2.1 million.
Mr Clarke announced a highly significant ministerial review of the legal test currently used by the Court of Appeal to quash criminal convictions.
It will examine to what extent an error in the trial process necessarily leads to a miscarriage of justice, said a Home Office spokesman.
Mr Clarke described the move as an "urgent review" which could lead to a change in the law.
A discretionary compensation scheme set up by the former home secretary Douglas Hurd in 1985 will be scrapped immediately, Mr Clarke said. That scheme paid out £2 million a year.
A statutory scheme which currently pays out £6 million a year will remain in force but a number of new limitations will be placed on claimants.
Mr Clarke said he planned to bring in new laws so that compensation could be reduced to zero because of previous criminal convictions or other conduct by the applicant.
Scrapping the discretionary scheme means people who have been wrongly convicted will not be able to apply for compensation if their cases have been quashed while going through the normal appeal process.
Instead they will have to sue for compensation through the civil courts.
Mr Clarke said: "The changes I have announced today will create a fairer, simpler and speedier system for compensating miscarriages of justice.
"I am scrapping the discretionary scheme which has become increasingly anomalous and I do not believe that this can continue to be justified.
"These changes will save more than £5 million a year which we will plough back into improving criminal justice and support for victims of crime. "
On the review of the Court of Appeal test, Mr Clarke said: "I have embarked on an urgent review, with the Lord Chancellor and Attorney General, of the statutory test the Court of Appeal must use in deciding whether to quash a conviction.
"I propose to examine whether and if so to what extent an error in the trial process necessarily means a miscarriage of justice.
"I will consult upon the results of this review as soon as possible.
"If a change in the law is needed, we will propose it."
A review of this kind was previously recommended by Lord Justice Auld.
Average final awards for wrongful conviction have increased from about £170,000 in 2003-4 to more than £250,000 in 2005-6, according to Home Office figures. The highest award was £2.1 million.
In comparison the average award to a victim of crime is just £5,000.
Mr Clarke said he wanted the review to ensure the court process was based on what suspects did or did not commit, rather than the "technicalities" of the legal system.
The Home Secretary has repeatedly stated his dislike of the adversarial system which operates in British courts, and backed the continental-style inquisitorial system instead.
"I think the more the legal system clearly relates to the conduct of individuals who have done things or have not done things and the less it relates to the technicalities of the legal process the better it is for the transparency of the legal system as a whole," Mr Clarke said.
"What individuals want to see is a legal system which correctly finds guilty those who are guilty of an offence and acquits those who are innocent, with respect to what they did or didn't do rather than respect to whether the legal process was or was not correctly followed.
"I think getting a system which is more transparent than that is genuinely beneficial."
Lord Justice Auld proposed allowing the court of appeal to come back with a "not proven" verdict, similar to the option available under Scottish law.
Mr Clarke said: "What I think individuals want to see is a situation where the court at all levels could properly assess the likelihood of an individual who is charged with a crime."
Mr Clarke confirmed that one possible option could be to extend the not proven verdict to courts in England and Wales.
"We are going to have a look at it," he said.
"It would be a big change. It would be a radical change.
"The time has come to assess it."
But he stressed that no conclusions had yet been reached.
Sally Ireland, of human rights group Justice, said: "Like victims of crime, victims of miscarriages of justice can suffer terrible losses.
"This plan smacks of robbing Peter to pay Paul.
"To disqualify people who may have spent many months in custody from the scheme is a cynical attack on people who have already suffered enough at the hands of the state."

20 April 2006
I'LL SLASH COURT APPEAL PAYOUTS, SAYS CLARKE
Clarke brings in £500,000 cap after awards top £2million
By Bob Roberts Deputy Political Editor
PAYOUTS to people wrongly convicted of crimes are to be capped at £500,000, Home Secretary Charles Clarke said yesterday.
In the past, awards have topped £2million, but now they will have the same limit as victims of crime.
The changes include ending the right to compensation for those whose convictions are overturned on the first appeal, even if they have spent time in custody. That would rule out payments in cases such as Angela Cannings.
She served 18 months in jail after being wrongly convicted of killing her two sons and won her case at the first appeal.
Such people would still be able to sue in civil courts.
Mr Clarke said: "The Government is committed to putting victims' interests at the heart of the criminal justice system.
"These changes will save more than £5million a year, which we will plough back into improving criminal justice and support for victims of crime."
But Shadow Home Secretary David Davis said the plans were an "extraordinary reflection" on the Government's values.
Mr Clarke said compensation would still be available for those whose convictions were quashed after new facts emerged months or years later.
He said the average award for miscarriages of justice had risen from £170,000 in 2003 to £250,000 last year. Victims of crime averaged £5,000 each, with payouts capped at £500,000.
Mr Clarke said awards would take account of previous criminal convictions and could be cut to nothing.
He cited the case of a man with a string of violent robbery convictions who got £75,000 compensation after one conviction was quashed.
The reforms could also change the rules for quashing convictions.
A ministerial inquiry will look at whether defendants should be acquitted because of technicalities. A Scottish-style "not proven" verdict could be introduced in the Court of Appeal.
bob.roberts@mirror.co.uk

Clarke's clamp on compo
By ANDREW PORTER
HOME Secretary Charles Clarke is cracking down on compensation payouts to people who beat criminal convictions on appeal.
The payouts system — which has seen £8million awarded in the last year — will be overhauled.
The previous highest payout was £2.1million but future individual awards will be capped at £500,000. It will mean a total saving of £5million a year.
The money saved will go to victims of crime claims.
In current English law there are only innocent or guilty verdicts.
But a new court verdict of “not proven” is being introduced.
And an inquiry will look at the legal test currently used by the Court of Appeal to quash convictions.
Mr Clarke said: “There are a number of cases where an issue arises after an acquittal about whether they were actually innocent.”
It could put an end to defendants being acquitted because of a technicality in the trial process.
Mr Clarke also is stopping part of the scheme in which judges can make discretionary payments to those wrongly convicted.
He also plans to reduce compo for claimants with previous convictions. Mr Clarke says the difference between what criminals wrongly jailed get and what victims of crime get needs to be addressed.
An average quashed conviction payout has risen from £170,000 two years ago to £250,000 this year. Crime victims get an average of just £5,000.
Stephen Downing, 48, is in line for £1million after his conviction for killing Wendy Sewell — the “Bakewell Tart murder” — was ruled unsafe.
Cops said they have no other suspects.
Changes to the system would rule out damages to someone like Angela Cannings because she was cleared and released on her first appeal in 2003 after being jailed for killing her two sons.

Clarke to tighten rules on quashed convictions
By Philip Johnston, Home Affairs Editor
(Filed: 20/04/2006)
An urgent review of the law to prevent offenders from being released from prison on a technicality was announced by Charles Clarke, the Home Secretary, yesterday.
He said the Government was ready to implement recommendations first made five years ago for a reappraisal of the test used to quash an "unsafe" conviction. One option to be considered is for English law to adopt the Scottish verdict of "not proven", which juries can return when they are not convinced of a defendant's innocence but neither can guilt be shown beyond reasonable doubt.
The review of Court of Appeal rules for deciding what is a miscarriage of justice could result in legislation to limit the circumstances in which an error in the trial process can be used to quash a conviction. Mr Clarke said the fact that mistakes might have been made did not mean that there had been an injustice.
"The more the legal system clearly relates to the conduct of individuals who have done things, or have not done things, and the less it relates to legal technicalities, the better it is for the transparency of the legal system as a whole," he said.
"What individuals want to see is a legal system which correctly finds guilty those who are guilty and acquits those who are innocent, with respect to what they did or did not do rather than whether the legal process was or was not correctly followed."
Mr Clarke said that raising the barrier for an acquittal would require careful consideration, though it would mark a return to the position before 1995 when judges could uphold convictions in certain circumstances even if errors had been made at the trial.

Mr Clarke is doing the law an injustice TELEGRAPH
By Philip Johnston
(Filed: 20/04/2006)
There is an old saying that it is better for 10 guilty men to walk free than for one innocent man to go to jail. Do you really believe that? More to the point, does our Home Secretary or our Prime Minister?

There is in the Government a view that the criminal justice system has got out of balance; that it favours the offender more than the victim; and that a bunch of clever barristers just play games with arcane rules to get people off, when it is as clear as day that they should be banged up (unless, of course, they are going to be put on community sentences or released early).
Both Charles Clarke and Tony Blair are concerned that the system works too much for its practitioners and not enough for the public at large. Mr Clarke will today seek to address one of its most egregious failures, the shambolic state of part of the probation service, which has been exposed by a spate of recent convictions for murder of criminals who should have been properly supervised in the community, but weren't.
But Mr Clarke thinks the malaise goes deeper than what happens to convicted felons on their release. Yesterday, he unveiled plans to cut the compensation that is paid to people who are freed on appeal and to make it more difficult for the "obviously guilty" to walk free on a technicality. He also believes the test of what constitutes an unsafe conviction needs to be "urgently" re-examined: he has even proposed introducing into English law the "not proven" verdict available to Scottish juries when they are unable to decide on guilt beyond reasonable doubt, but cannot bring themselves to declare the alleged offender innocent.
The immediate question that arises with Mr Clarke's proposals is, why now? It cannot, of course, have anything to do with the proximity of the local elections and a desire to promote what on the surface looks like a popular, and populist, attack on criminals getting away not only with murder, but our money.
The timing is particularly odd because just such a review of the appeal test was recommended nearly five years ago by Lord Justice Auld in his seminal report on the criminal justice system and we know that the Home Office considered it because a hapless civil servant left a pile of briefing notes in a Whitehall pub which concluded that there was "unlikely to be public controversy" if the test was amended. So why was nothing done about it then? Mr Clarke has now embarked on "an urgent review" of the very same issue. This presumably passes for swift and purposeful action in Whitehall.
Mr Clarke considers that such a change would be a "radical" step, though in fact the system used to work the way he would like it to before the law was unaccountably amended in 1995. Until then, the Court of Appeal could uphold a conviction even when the trial procedures had been flawed, provided there was no "substantial miscarriage of justice". For some reason this proviso - which seemed adequately to reflect the need to balance an accused person's right to a fair trial, conducted according to law, with the desire to avoid overturning convictions on the basis of inconsequential errors at trial - was abandoned. A simple remedy would be to reinstate it.
More problematic is Mr Clarke's proposed cut in the compensation available to people who have been wrongly convicted, either because the trial was bungled or because they were innocent. There is already a statutory scheme for recompensing people in such circumstances. What Mr Clarke wants to abolish is the discretionary scheme, which he regards as "increasingly anomalous and unjustified" and which pays out £2 million annually to what the Home Secretary would regard as thoroughly undeserving causes.
This is perverse. Under the statutory scheme, a man convicted of a series of sexual offences against children was awarded £10,000 because one of the offences was quashed, even when the other cases were upheld. This is clearly ridiculous. Yet Mr Clarke intends to keep this scheme (though capping it at £500,000), while removing the discretion to allow high levels of compensation to be paid to people who are locked away for years yet who are innocent - not on a technicality, but because they did not commit the crime.
Surely the Government is doing this the wrong way round. Isn't the whole point of a discretionary scheme to enable payments to be withheld from people who do not, in the opinion of an arbiter, deserve them, while keeping in reserve the prospect of far higher compensation for those to whom a genuine and mighty injustice has been done?
Mr Clarke conceded that the discretionary system - of which his office is custodian - had become too loose. The solution to this is to tighten it, not abolish it. Also, the comparisons the Home Office made between the levels of compensation paid to victims of crime and to the victims of miscarriages of justice were thoroughly specious.
It is irrelevant to say (though it sounds good to do so) that a rape victim would receive £11,000 from the Criminal Injuries Compensation Authority, while someone who served four years in jail before his rape conviction was quashed received £400,000. Not only is such a comparison pure sophistry, it is also inimical to the presumption of innocence that is supposed to underpin our judicial system, but looks increasingly threadbare amid attacks on jury trials and the abolition of double jeopardy.
There is a much-quoted passage in the Auld report, referred to by Mr Clarke, that "a criminal trial is not a game under which the guilty defendant should be provided with a sporting chance. It is a search for the truth." So it is; and it is galling to everyone when technical loopholes are exploited to let the guilty walk free, though they do every day of the week if a case cannot be proved against them beyond reasonable doubt.
That is the essence of our system. Mr Clarke has made it abundantly clear that he does not like it.
In which case, he should seek to close the loopholes, rather than to establish new injustices in their place.

Clarke scraps multi-million-pound deals for miscarriage of justice victims
By Philip Johnston
(Filed: 20/04/2006)
The scheme that pays out unlimited compensation to the victims of miscarriages of justice is to be abolished immediately, Charles Clarke, the Home Secretary, said yesterday.

Payments under a separate, statutory, scheme are to be capped at £500,000, saving an estimated £5 million a year which the Government said would be ploughed back into support for victims of crime.
However, the cuts were denounced by campaign groups and Opposition parties who said people wrongly convicted were also "victims" who should be properly compensated.
Mr Clarke's reform of the compensation scheme for wrongful conviction is to take effect immediately.
Under the discretionary scheme, which is to be scrapped, payments are un-limited and the most paid out is £2.1 million. Average final awards have increased from about £170,000 in 2003-4 to more than £250,000.
The scheme's abolition means there will be no payments to people who have been arrested but subsequently not tried or those whose cases have been quashed while going through the normal appeal process. However, they will be able to sue through the civil courts.
Such a change would stop discretionary damages being awarded to someone like Angela Cannings, who was wrongly convicted of killing two of her sons and served 20 months in prison before her successful appeal in 2003.
Under the statutory scheme, however, the Government is bound to pay out compensation when a miscarriage of justice has occurred and the conviction only quashed after several appeals or many years after conviction.
In total, about £8 million is paid out every year for wrongful convictions compared with around £200 million for victims of crime. Mr Clarke said he wanted some of the former redistributed to the latter though the Government is also reviewing the amounts paid under the Criminal Injuries Compensation Scheme. Mr Clarke said he wanted a simpler, clearer and fairer system, with no compensation at all paid to someone with previous convictions or whose conduct was reprehensible.
But the reform ran into immediate controversy. David Davis, the shadow home secretary, said: "Both victims of crime and those who have suffered a miscarriage of justice should be compensated in a fair fashion that reflects the impact of their suffering. In the case of a miscarriage, the need is overwhelming because it is the state that instigated proceedings in the first place."
Nick Clegg, the Liberal Democrats' home affairs spokesman, said: ''Cutting compensation to people who have suffered sometimes very serious miscarriages of justice cannot be a mere cost-cutting exercise. In some cases people's livelihoods are left utterly destroyed even if they subsequently win an appeal.
"The Government claims that savings made in cutting to victims of miscarriages of justice will be directed to victims of crime, but there is no logical or moral reason why one class of victim should be short-changed in favour of another. Both should be given adequate support and compensation."
Sally Ireland, of Justice, the human rights group, said: "To disqualify people who may have spent many months in custody from the scheme is a cynical attack on people who have already suffered enough at the hands of the state."
Paddy Hill, one of the Birmingham Six, who were wrongfully convicted of the 1974 Birmingham pub bombings, said: "What people seem to forget is that every time you go out on the streets you are liable to be a victim of a crime. What you do not expect is to be tortured and framed and to have evidence falsified against you by the police."
James Banks, the director of the Miscarriages of Justice Support Service, run by Royal Courts of Justice Citizen Advice Bureau, said that people cleared typically left court with a grant of £50 and had to wait about nine months to hear if they were eligible for compensation.
"Putting an artificial cap on the amount to be paid out ignores the real life impact experienced by those suffering a miscarriage of justice," he added.

How victims have been compensated
By Philip Johnston
(Filed: 20/04/2006)
Under the discretionary compensation scheme that Charles Clarke is scrapping, substantial payments have been made to victims of miscarriages of justice. They include two cousins who spent 18 years in prison before being cleared in 1997 of murdering the newspaper boy Carl Bridgewater.
Michael Hickey was awarded £990,000 as compensation and Vincent Hickey £506,000, though their payments were cut by 25 per cent to reflect the amount they would have spent on "board and lodging" if they had not gone to prison. Michael O'Brien was awarded £647,900 after being cleared of the murder of Phillip Saunders, a Cardiff newsagent.
The Home Office also issued a number of anonymous case studies showing how the system compared with payments made to crime victims.
A man with numerous convictions for robbery had one quashed on appeal. When the compensation award was made he was serving nine years in jail after being properly convicted of robbery and firearms offences. He was awarded compensation of £75,000 for the quashed conviction.
"With his past and current criminality, he would be very unlikely to receive compensation had he been a victim of crime," the Home Office said.
A man was awarded £10,000 when a conviction for sexual assault on a child was quashed even though convictions for similar offences against other children were upheld. Had he been a victim of crime it is very unlikely he would receive compensation but he is eligible for compensation under the miscarriages scheme.
A man convicted of murder had his conviction quashed after spending 19 years in prison and was awarded £800,000. ''Relatives or dependants of victims of unlawful killings receive on average £13,000 from the Criminal Injuries Compensation Authority."
A man jailed for fraud offences had his conviction quashed after serving seven months in prison. Interim payments of £500,000 have been made under the discretionary scheme and a claim for several million pounds is under consideration.