Tony Blair had promised that the Assets Recovery Agency would target hardened criminals and double the money seized by police and Customs. The agency, which was set up in 2003, had a target of breaking even by this financial year but its latest accounts show that it recovered just £4.3 million while spending £18 million this financial year alone.

The Home Office is to tell MPs that the agency will become part of the Serious Organised Crime Agency.

Senior sources at the Assets Recovery Agency said that the merger would in effect close the organisation.

Cases expected to take a maximum of three years are dragging on and the agency, which has grown to 200 staff including lawyers, accountants and investigators, was described as a classic example of government incompetence.

One senior member of the Opposition said that the Government’s human rights legislation had frustrated the agency’s progress. The failure is deeply embarrassing for the Government, which set up the agency to act against crime barons who were estimated to control £220 million worth of assets.

Jane Earl, the agency’s director, said last year that she was quitting for family reasons. Her announcement followed the publication of the agency’s annual report, which showed that the agency was costing four times more to run than it was managing to recover.

The agency’s remit was to reduce crime by supporting police and Customs officers in financial investigations.

The Serious Organised Crime Agency began operations last year with more than 4,000 investigators drawn from police, Customs and the Immigration Service.

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