Confiscation orders are failing to provide the government with value for money as the vast majority of proceeds from criminal activities are being kept by the perpetrators, a public spending watchdog has found.

Out of every £100 generated by the criminal economy, £99.65 is kept by the criminals, according to the National Audit Office's confiscation orders report.

In 2012-13, 673,000 offenders were convicted of a crime, many with a financial element, yet only 6,400 confiscation orders were set.

Amyas Morse, head of the National Audit Office, said: ‘The fundamental problem is a lack of strategic direction and agreement on what level of confiscation would constitute success. This is compounded by poor information, lack of knowledge, outdated IT systems, data errors and ineffective sanctions.’

He said there is a 'sharp need for a coherent and joined-up cross-government strategy’. At the moment this activity 'cannot be seen as value for money nor as a credible deterrent to crime’.

HM Courts and Tribunals Service’s regional confiscation units take 45 hours per week to to enter information manually into multiple systems. There are also numerous data errors, said the report.

It found insufficient awareness of the Proceeds of Crime Act and its potential impact throughout the criminal justice system.

‘Confiscation orders have a low profile within law enforcement agencies, with low awareness of financial legislation outside specialist teams. This results in many cases not being considered for confiscation,’ it said.