‘Fundamental weaknesses’ in a system to deprive criminals of the proceeds of their crimes remain, according to the public spending watchdog, which says offenders now owe £1.6bn to the state.

The government clawed back only 26p out of every £100 of identified criminal proceeds, the National Audit Office (pictured) reported in December 2013.

Publishing a progress report, the watchdog says improvements in collecting confiscated income over the past two years ‘have not been enough’ to reduce existing debt, which has risen by £158m since September 2013. Most of the increase is due to accrued penalty interest of 8% for non-payment.

A Criminal Finances Improvement Plan, established in 2014, has helped to ‘galvanise’ efforts to improve enforcement orders, the report states. But it does not set out agreed success measures or clarify the government’s objectives for confiscation.

Law enforcement and prosecution agencies have not increased their use of early action, with fewer restraint orders (to freeze assets) and fewer financial investigators available than two years ago.

Although criminal justice bodies have improved how they administer confiscation orders, they ‘need to show more determination and urgency’ to implement recommendations made by the Committee of Public Accounts and ‘address the deeper systemic problems surrounding the management of confiscation orders’.

However, the NAO says joint working has improved at the ‘operational’ level.

The sharing of information and expertise has improved as a result of different departmental teams being based in the same building in London.

The report acknowledges the government’s efforts to confiscate more UK criminal assets transferred abroad.

The Crown Prosecution Service has introduced six new asset recovery advisers dedicated to confiscating crime proceeds in countries such as Spain and the United Arab Emirates.

Despite ‘slow’ progress, the CPS recovered £300,000 from the UAE for the first time last year.

However, the watchdog says criminal justice bodies had more success assisting other countries to recover assets held in the UK. Last year they helped to recover £28m on behalf of Macau.