Newe incentives to encourage early guilty pleas in fraud cases will certainly be welcomed by London's fraudsters. But the rest of us will have to swallow hard and put pragmatism ahead of principle.

After all, why should a defendant who pleads guilty be any less culpable than one convicted after a contested trial? The offence remains the same. But the law normally rewards defendants with a third off their sentences if they plead guilty at the first reasonable opportunity. The justification given for this is that an early plea relieves witnesses of the need to give evidence and guarantees a conviction, saving a great deal of money and allowing everyone to move on.

Now the Government is consulting on a new framework that will encourage fraudsters to put their hands up at a much earlier stage than before.

"This is absolutely not plea bargaining," says the Attorney General, Lady Scotland. "It is plea negotiation."

What's the difference? Plea bargaining is what they have in the United States. Prosecutors bring the most serious charges possible. Rather than risk an extremely long prison term, defendants agree to plead guilty in exchange for a much lighter sentence, which is then rubber-stamped by the court. That produces guilty pleas in 98% of US fraud cases. But offenders such as the NatWest Three can claim, plausibly enough, that they are pleading guilty only because the punishment for conviction following a contested trial is too great to risk.

Under Lady Scotland's plea negotiation framework, prosecutors and defendants would meet to discuss the case as much as a year or two before it would normally be ready for trial. A plea of guilty at this point would relieve prosecutors of the need to take detailed statements from witnesses, qualifying for the full one-third reduction.

But the prosecutor would not accept a guilty plea unless the defendant was prepared to admit charges that reflected the seriousness of the offending and gave the court power to pass an appropriate sentence.

The draft framework says there would need to be a written "plea agreement", perhaps indicating the sentence or the range of sentences that the prosecutor was willing to accept.

This would not bind the court. The judge would be free to indicate his own view of the appropriate sentence before the defendant decides whether to plead.

But if the court accepts the plea agree-ment and the defendant pleads guilty, the plea agreement would "form the basis" on which the defendant is sentenced. If the court rejects the agree-ment or the defendant declines to plead guilty, further charges could be brought. However, it will be presumed that nothing said by the defendant during negotiations may be used against him.

All this is something of a departure for prosecutors, who are not used to considering what an appropriate sentence should be. But they would not have the last word.

"It does not prevent the judge saying, 'I've looked at this and I think the sentencing bracket is wrong'," Lady Scotland says. "It's not going to be a process through which people will be let off more lightly."

Nor, she insists, would the scheme put judges under pressure to pass a much softer sentence in order to avoid the huge cost and uncertainty of a contested trial. Far from it, says the British Bankers' Association. Its director of financial crime, Richard Cook, hopes the plans will alter "the ratio of risk to reward that currently sits heavily in favour of the fraudster".

And the Financial Services Authority believes that discussion of pleas at an early stage "will be a powerful tool in securing a just result".

With so much to gain, letting fraud-sters off more lightly seems a small price to pay.

EMAIL: joshua@rozenberg.net