Terrorist Asset-Freezing etc. Bill [Lords]
(Limited Text - Ministerial Extracts only)
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The Financial Secretary to the Treasury (Mr Mark Hoban)
I beg to move, That the Bill be now read a Second time.
The Bill makes provision for imposing financial restrictions on, and in relation to, certain persons believed or suspected to be, or to have been, involved in terrorist activities. It amends schedule 7 to the Counter-Terrorism Act 2008, and is for connected purposes.
Hon. Members will be aware that the threat to the UK from terrorist attack continues to be judged as severe, meaning that an attack is highly likely. Just a few weeks ago, intelligence agencies uncovered another plot designed to cause death and destruction to innocent people. As my right hon. Friend the Home Secretary revealed, those involved in that air cargo bomb plot were well connected and part of an international network of extremists.
It would seem that the terrorist threat that we face is developing. We see the continued emergence of a more diverse and devolved terrorist threat that is joined more by ideology than by hierarchy, and that is technologically very capable. Small networks, or even individuals acting alone, are able to use technology to their advantage, giving them the ability to wreak havoc worse than their size might suggest. It is clear that those who wish to do us harm operate on an increasingly global scale and are devising ever more sophisticated methods of avoiding detection. This is why we must continue to ensure that the tools we employ to combat terrorism remain effective. We must have the ability to take preventive action to disrupt suspected terrorists.
Keith Vaz (Leicester East) (Lab)
I understand that 205 accounts have been frozen under the previous legislation. Does the Minister know whether there is any evidence of a link between any of those accounts and actual terrorist activity? I am not disputing in any way what the Government are doing, and I fully support the Bill, but I would like to know whether any connection has been made between those accounts and any kind of terrorist activity.
Mr Hoban
In regard to the Bill, and to the legislation that it will replace, assets are frozen where there is reasonable suspicion. The Bill will change that test in order to strengthen it.
Asset freezing is a tool that we can use to take preventive action to disrupt suspected terrorists, and it is used internationally to prevent and disrupt the financing of terrorism. The impact of our ability to freeze the funds of potential perpetrators should not be underestimated. By cutting off access to finance and preventing money from reaching terrorist networks, we can stop individual acts in their early stages.
Currently, around £140,000 is frozen in the UK under our domestic terrorist asset-freezing regime. That might not seem a large amount, but hon. Members will be aware that it takes only a relatively modest amount of money to carry out a deadly attack. By way of illustration, the dreadful attacks of 7 July 2005 cost less than £10,000 to carry out, and the air cargo bomb plot is also likely to have cost a comparatively small amount.
Keith Vaz
No one is disputing the importance of this legislation or the legislation that it replaces, or the decision of the Supreme Court that has meant that this measure has had to be rushed through in this way. The Minister has not really answered my question, however; he has just given me some information about reasonable suspicion. Was there any connection between any of the accounts that have been frozen, for whatever reason, and any terrorist activity?
Mr Hoban
May I just dispute the right hon. Gentleman’s point about the Bill being rushed through? It has not been rushed through. The process, of which he might be aware, is that, following the Supreme Court judgment earlier this year, emergency legislation was taken through this House and the other place to ensure that the terrorist asset-freezing regime remained in place until the end of this year. At that point, the previous Government initiated a consultation on the way in which that legislation should be replaced. That consultation started earlier this year, and has continued. My noble Friend Lord Sassoon introduced this Bill in the other place, and further safeguards have been included in it as a consequence of the consultation process. I do not believe that anyone could say that the process has been rushed. It has taken place in the methodical and thorough manner required to balance civil liberties concerns with the importance of national security. Although I am not in a position to disclose the links between the accounts frozen and any activity, those accounts and the evidence are kept under review, and orders are lifted where it is felt appropriate.
Asset freezing is not just a domestic tool used by the UK to combat terrorist financing. We have an international obligation to freeze the assets of terrorists, and it is important to consider it in some detail. In 2001, after the 9/11 attacks, the UN Security Council unanimously passed resolution 1373, requiring states to take a range of measures to combat international terrorism and the financial flows that underpin it. The overarching objective of the resolution was to
“combat by all means…threats to international peace and security caused by terrorist acts”.
It was clearly intended to be preventive, and it calls on states to
“work together urgently to prevent and suppress terrorist acts, including through increased cooperation and full implementation of the relevant international conventions relating to terrorism”.
Those are broad provisions, and intentionally so. They reflect the Security Council’s real and unanimous commitment to take all necessary measures to prevent terrorism.
Although resolution 1373 is quite detailed in its obligations, the Financial Action Task Force, the international standard-setting body for anti-money laundering and counter-terrorist finance, has helpfully provided further detailed guidance on the implementation of UN terrorist asset-freezing obligations. That guidance reflects the intention for the resolution to be preventive in its effect, which is an important consideration when we come to consider in more detail the appropriate legal test for freezing assets.
Particularly for the benefit of hon. Members who did not participate in our debates earlier this year, I should like to explain a little of the history behind the Bill and why we need to act now. Following the adoption of resolution 1373, the previous Government took the decision to implement UN terrorist asset-freezing obligations through secondary legislation, by Orders in Council made under the United Nations Act 1946. Following litigation brought by several applicants affected by one of those orders, which went all the way to the Supreme Court, that court ruled earlier this year that the previous Government had gone beyond the general powers conferred by section 1 of that Act in making Orders in Council to give effect to our UN terrorist asset-freezing obligations. The orders were not subject to parliamentary scrutiny, so Parliament did not have the opportunity to consider how the UK should best give effect to its obligations. The Supreme Court quashed the relevant order with immediate effect.
Many Members will remember that in response to the judgment, the previous Administration rushed through emergency legislation, with cross-party support, to maintain the asset-freezing regime and ensure that terrorist assets would not have to be unfrozen. No one in the House wanted to see the unfreezing of terrorist assets, and that was why my party and others were prepared to support the emergency legislation. At the same time, there was a strong feeling in the House that the terrorist asset-freezing regime needed to be scrutinised by Parliament in more detail at the earliest opportunity, and that there was scope to improve it by strengthening civil liberties safeguards. For that reason, Parliament inserted a sunset clause providing for the temporary legislation to expire on 31 December this year. That is why we are now legislating to ensure that the UK’s terrorist asset-freezing regime can be improved and put on a secure legislative footing in time for that deadline.
As the House will know, this Government are committed to striking the right balance between protecting public safety and protecting civil liberties. We believe that in a number of areas, it is possible to strike a better balance and strengthen civil liberties safeguards without undermining public safety. Terrorist asset freezing is one such area, and that is why the Bill is not intended simply to reintroduce the previous regime that the Supreme Court quashed. I shall explain that.
The Bill, as introduced in the other place, included several changes to strengthen the proportionality, fairness and transparency of the regime. Briefly, they included a narrowing of the prohibitions relating to third parties, so that a third party does not commit an offence if they did not know, or reasonably suspect, that they were breaching a prohibition; excluding payments of state benefits to spouses or partners of designated persons from the scope of prohibitions, even when those benefits are paid in respect of a designated person; and a new requirement that the operation of the regime be independently reviewed nine months after the Bill is passed and every 12 months thereafter.
To strengthen further the protection afforded to designated persons, the Government tabled significant safeguards before the Committee stage in the other place. Those additional safeguards reflect the civil liberties concerns that were raised in Parliament during the passage of the emergency legislation and in the public consultation conducted over the spring and summer.
First, we addressed the legal threshold that must be met before the Treasury can freeze a person’s assets. Under the current Order in Council, the Treasury may freeze a person’s assets on the basis that it reasonably suspects that they are involved in terrorism, provided that the Treasury considers that necessary to protect members of the public. Under the Bill, the Treasury can no longer rely on a threshold of reasonable suspicion if it wishes to make a designation lasting more than 30 days.
The Government consider that there is a good case for retaining a reasonable suspicion threshold for a temporary period of 30 days only. That will enable assets to be frozen when there is sufficient evidence to meet a suspicion threshold, but when, for example, investigations are ongoing, and there is therefore a reasonable prospect of subsequently meeting a higher evidential threshold. A good example of that is when assets are frozen alongside arrest while the police build the evidential case for bringing criminal charges, as happened with the freezing of assets in connection with the transatlantic plane bomb plot in 2006.
Dr Julian Huppert (Cambridge) (LD)
The Minister mentioned tying freezing to arrest, which I agree with, but can he give examples of when we might ever want the power to freeze assets without arresting somebody?
Mr Hoban
We might freeze assets in the UK that belong to terrorists who operate overseas in a more benign environment, when it would be difficult for us to secure the arrest of individuals given where they operate. There is therefore a strong argument for those powers. The hon. Gentleman will be as acutely aware as I am that his predecessor as the hon. Member for Cambridge led for the Liberals on the emergency legislation and raised a number of the civil liberties concerns that we are addressing in the Bill.
The Government do not believe that assets should remain frozen on the basis of a reasonable suspicion threshold for longer than 30 days. That is why the Bill makes it clear that to make a final designation—meaning one that lasts for up to 12 months—the Government can act only if we have a reasonable belief that a person is or has been involved in terrorism.
Dr Huppert
As I am sure the Minister understands, I am now trying to represent David Howarth—he is my constituent. What is the test of reasonable belief compared with, for example, the civil standard of the balance of probabilities? Is reasonable belief essentially the same, or is the Minister arguing for a lower standard?
Mr Hoban
The reasonable belief test is less than the balance of probabilities test, as I am sure the hon. Gentleman’s constituent is aware, but the Government believe that the measure strikes the right balance. The Bill is preventive, which explains why we have chosen a reasonable belief test rather than a balance of probabilities test.
The second major civil liberties safeguard that we have introduced involves strengthening judicial oversight of decisions to impose asset freezes. Under the current legislation, a court can review a decision to impose an asset freeze only under the judicial review procedure. The House of Lords Constitution Committee recognised that judicial review gives the courts a significant power of scrutiny, particularly when decisions have been made in a national security context. However, there were concerns that although the courts can use, and have used, judicial review as an effective power of scrutiny in control order cases, there is a lack of clarity about how the courts would operate judicial review in the context of asset freezing.
To address that and to provide clarity—we expect the courts to apply rigorous scrutiny to asset-freezing designation decisions—the Government have provided in the Bill that decisions to freeze assets will be subject to a full merits-based appeal procedure. By providing a full merits-based appeal, we can ensure that the same degree of scrutiny that is given, for example, in control order proceedings—effectively such proceedings are equivalent to a full merits-based review—is afforded to individuals subject to a designation. I wish to inform the House that I have put a schedule of the changes I have highlighted in this Bill in the Commons Vote Office, and I hope that will help hon. Members during today’s debate and in Committee.
I wish now to deal with the content of the Bill, beginning with the provisions under part 1. The effect of a designation under this legislation is threefold: to forbid dealing with a designated person’s funds and economic resources; to forbid making funds or economic resources available to such persons; and to forbid funds or economic resources being made available to a person when the designated person will consequently obtain a significant financial benefit.
Part 1 sets out the provisions allowing the Treasury to make a final designation, necessary to protect the public, where it reasonably believes that a person is or has been involved in
“the commission, preparation or instigation of acts of terrorism”
or
“conduct that facilitates the commission, preparation or instigation of acts of terrorism”.
It also sets out the provisions where the Treasury may make an interim designation, necessary to protect the public, where it reasonably suspects that a person is or has been involved in the commission, preparation, or instigation of acts of terrorism, or conduct that facilitates such acts. An interim designation expires at the end of 30 days, unless a final designation is made. Part 1 provides that the prohibitions are contravened only when someone knows, or has reason to suspect, that the person whose funds or economic resources they are dealing with, or to whom they are providing funds, economic resources or financial services, is a designated person.
The Bill also provides for licences, which permit exemptions to the freeze. I should like to point out that the Treasury’s policy is to issue an individual licence to designated persons straight away to enable them to carry on paying for their ordinary, everyday expenses. That minimises the immediate impact of an asset freeze on a designated person and their family. Any further licences, or amendments, can be applied for by the designated person, or by any person affected by the prohibitions, at any time. The Treasury has also issued a number of general licences, which allow certain transactions to occur without the need for a separate licence application to be made—for example, to ensure that a designated person can have access to legal aid without delay.
Part 1 also sets out the reporting obligations on the financial sector in relation to these provisions, and the Treasury’s general information-gathering powers to monitor compliance with, and detect evasion of, the regime.
Dr Huppert
Perhaps the Minister could help me. Nothing in the Bill makes it clear that the Treasury is required to make reasonable licences available. Is there an expectation of what the Treasury would allow?
Mr Hoban
Yes. As I have said, we have issued a number of licences, which I understand run alongside the regime that is in place. That is why I do not think the hon. Gentleman will find reference to a general licence on legal aid in the Bill. This runs in parallel to the legislative framework in place.
Tom Brake (Carshalton and Wallington) (LD)
The Minister will be aware that Lord Wallace of Tankerness said that
“the general presumption is that where a licence is requested to pay for legal costs, it will be granted.”—[Official Report, House of Lords, 6 October 2010; Vol. 721, c. 174.]
Does the Minister think there any circumstances in which a licence would not be granted to cover legal costs?
Mr Hoban
I do not want to get into giving hypothetical answers to hypothetical questions. If the hon. Gentleman has a particular concern and wishes to write to me about it, I shall be happy to respond appropriately.
Finally, part 1 sets out the obligations on the Treasury to appoint an independent reviewer and the penalties attached to breaches of the asset-freezing provisions. Part 2 makes minor amendments to the Treasury’s financial restrictions powers under schedule 7 to the Counter-Terrorism Act 2008. Those powers are an important part of the Government’s toolkit to deal with risks posed to the UK by money laundering, terrorist financing and the development or production of chemical, biological, radiological or nuclear weapons. They also enable the Government to take action where the Financial Action Task Force advises that counter-measures should be taken because a country poses a money-laundering or terrorist-financing risk. The risks that those powers address are of a serious nature and it is imperative that we have effective financial tools to tackle them. We have identified a small number of technical amendments to these powers.
First, we are introducing a prohibition on the intentional circumvention of any restriction issued under the powers in order to ensure that a restriction cannot simply be bypassed. That will prohibit anyone in the UK financial services sector who has to comply with the requirements of a restriction from intentionally rearranging their business to circumvent those requirements.
Secondly, we are introducing a provision to allow restrictions to be targeted against subsidiaries of companies based in the country of concern. Thirdly, we will clarify the point that, when the Government direct a UK financial or credit institution to implement a restriction, that restriction can apply across its branches, wherever located. Fourthly, we are making provision for the transfer from the Department of Enterprise, Trade and Investment in Northern Ireland to the Financial Services Authority the responsibility for ensuring the compliance of Northern Ireland credit unions with the requirements of a restriction.
This Bill, when passed, will create a secure legislative footing for an important and necessary counter-terrorism power. The Government recognise that such powers are not to be created lightly, and I am confident that the safeguards in the Bill strike the right balance between national security and the rights of the individual. This is the right course of action to protect our national security, to protect the freedom of our citizens and to prevent future attacks, and I commend this Bill to the House.
The Exchequer Secretary to the Treasury (Mr David Gauke)
It is a pleasure to be able to conclude today’s Second Reading debate. This is a most important Bill that covers issues of national security and civil liberties. These are significant issues that deserve full scrutiny and I would like to thank all hon. Members for their eloquent contributions.
My hon. Friends the Members for West Suffolk (Matthew Hancock) and for Hexham (Guy Opperman) brought experience and expertise to the debate. My hon. Friend the Member for Cambridge (Dr Huppert) spoke in a way that I am sure his predecessor, David Howarth, would approve of. He raised a number of questions in regard to the Joint Committee on Human Rights, which I shall address in detail in a moment.
The right hon. Member for Leicester East (Keith Vaz) made a memorable speech—[Laughter.] Well, at least I will remember it. He noted that he was somewhat suspicious of anything that had cross-party support from both Front Benches. I imagine that he did not experience that very often when he was a Minister. I should like to thank the hon. Member for Dwyfor Meirionnydd (Mr Llwyd) for highlighting his concerns about knee-jerk legislation and making a similar point to that of the right hon. Member for Leicester East. The hon. Member for Upper Bann (David Simpson) brought to the debate the experience of his part of the United Kingdom, Northern Ireland, which has suffered so much from terrorism over many years. He asked a number of questions that I hope to be able to respond to later.
A number of issues have been raised in the debates over the course of this year, and I am pleased to say that the Government have responded to the concerns raised in the House earlier this year and to those raised in the public consultation exercise on the previous Government’s draft legislation. We introduced legislation as soon as possible, to ensure that Parliament has sufficient time to scrutinise the legislation properly and still meet the 31 December deadline to avoid a gap in the regime and the unfreezing of assets. The Bill before the House today is a significant improvement on the current asset- freezing regime, because it strengthens civil liberties safeguards without undermining the effectiveness of the UK’s asset-freezing regime in disrupting terrorism.
Let me address in more detail the striking of the right balance between national security and liberty in the context of the Bill. I shall deal first with the national security element of that balance. Let me be clear that, while it is true that the asset-freezing regime has an impact upon human rights, it is the Government’s view that the interferences set out in the Bill are necessary in the interests of national security and public protection. We have recently been reminded of the very real threat posed by international terrorism.
To achieve our objectives, the Government must have the right tools to combat terrorism in the UK and overseas. It is not sufficient for us to be reactive, and to be able to deal with an atrocity only after it has happened. We must be able to act preventively, to disrupt terrorist plots in their planning stages. Hon. Members will acknowledge that one of the most effective ways of doing this is to limit terrorists’ access to finance. We know that terrorists need finance to carry out attacks, to maintain their infrastructure, training, equipment and recruitment, and to promote their message of hate. In order to contain the threat that these extremists pose, the Government need to be able to act quickly to freeze the funds and finances of those involved in terrorism who are considered to present a real threat to the general public. The Government believe that the UK’s asset-freezing regime is the right means to achieve that.
There is no question but that the asset-freezing regime has proved a valuable tool for disrupting and preventing terrorist financing. The £140,000 of currently frozen assets could be used to devastating effect were they to be released. The right hon. Member for Leicester East made the point that the total amount that has been frozen is perhaps surprisingly small, but it is worth remembering that disproportionate damage can be done with a small amount of money. As we have heard, the 7/7 attacks cost less than £10,000.
Keith Vaz
We clearly understand that it takes only a small amount of money in certain circumstances, but will the Exchequer Secretary clarify those figures for us? Is he saying that £140,000 is frozen at the moment? Does he know the total amount that has been frozen since the previous Government introduced the original legislation, or would he be able to write to me with the number or place it in the Library so that Members will all know it?
Mr Gauke
The current figure is £140,000, as I said. The figure that the right hon. Gentleman talks about is £290,000, which as I understand it is the amount that has been frozen in total. He asked earlier about the 205 accounts referred to in the written ministerial statement. That does not necessarily mean that 205 people are involved, and it is worth pointing out that 24 people in the UK are subject to asset freezes under the legislation that the Bill will replace.
Keith Vaz
I think the fault is perhaps in the drafting of the written statement. It states:
“As of 30 September 2010, a total of 205 accounts containing just under £290,000”
were frozen. It would be helpful if, perhaps through the next such statement, we could know the current figure. That is where my figure comes from.
Mr Gauke
The right hon. Gentleman’s comments are helpful, as always, and I am sure they have been duly noted.
It is right to point out that asset freezing is a preventive tool, and that people can be subject to a freeze only if the legal test is met—in other words, if they represent a terrorist threat and so the freeze is necessary for public protection. The Treasury must have reasonable grounds to suspect their involvement in terrorist activity. I will return to that point in greater detail when I turn to the comments of the Joint Committee on Human Rights. It is also worth pointing out that 21 of the 24 persons in the UK subject to these measures have been charged with, or convicted of, terrorist offences.
Asset freezing is not just an effective domestic tool, it is necessary. The UK has an international obligation to freeze the assets of terrorists, and the Government are content that the Bill’s provisions remain fully compliant with international standards and are sufficiently robust to meet the needs of the police and security services, who are engaged in a day-to-day battle to maintain the security of the general public.
The right hon. Gentleman asked one or two questions about complaints. Any person who is not satisfied with a decision taken by the Treasury may request a review of the decision, and if after that review they are still unsatisfied, a complaint regarding the handling of the case can be made under the Treasury’s official complaints procedure. A senior official not directly connected with the case will then take the review decision. A designated person may appeal against their designation through the courts, and in the case of any other decision, such as on licensing, applications can be made to the High Court for the decision to be set aside.
The right hon. Gentleman asked what happens to people whose freezes have been revoked. As he pointed out, the revocation of a freeze does not show that the system is failing to work or that the imposition of a freeze in the first place was wrong. Circumstances can change, so it may no longer be necessary to maintain a freeze even though it was necessary when it was imposed. When a freeze is revoked, the individual concerned is notified, the revocation is brought to the attention of the financial sector and the outside world and the restrictions on their financial activity are removed.
One concern that has understandably been raised is whether the system is well targeted on terrorism. My hon. Friend the Member for Cambridge made that point. Terrorism, for the purposes of the Bill, is defined in clause 2(2) as involving one or more of
“the commission, preparation or instigation of acts of terrorism…conduct that facilitates the commission, preparation or instigation of such acts, or that is intended to do so”,
or conduct that supports or gives assistance to persons believed to be involved in such conduct.
To respond to the point made by the right hon. Member for Delyn (Mr Hanson) about organised crime, the Bill contains very specific powers designed to meet our UN obligations to freeze the assets of terrorists. They are not intended to be used against organised criminals unless they are also involved in terrorism, and the Government have other powers to deal with organised crime.
I turn to the very important issue of civil liberties, because we have to get that right and ensure that the balance is correct. As my hon. Friend the Financial Secretary set out, the Bill does not simply reintroduce the previous regime, which the Supreme Court quashed. We have introduced additional safeguards and made changes to ensure that the regime operates in a clearer and more transparent manner. Those changes reflect the civil liberties concerns that were raised in Parliament during the passage of the emergency legislation and in the public consultation exercise conducted over the spring and summer. We do not believe they will undermine the effectiveness of the regime or continued compliance with international best practice.
I shall highlight the key elements of those changes. We are introducing more targeted prohibitions, to limit the impact of asset freezing on innocent third parties. There is provision to ensure that the regime does not catch the payment of state benefits to the spouses or partners of designated persons, and so does not have the draconian impact on family life about which the Supreme Court was concerned. The establishment of an independent review function will ensure that there is proper independent scrutiny of the asset-freezing regime.
As the Financial Secretary highlighted, during the Bill’s passage in the other place the Government introduced significant further safeguards to raise the legal test for freezing assets for more than 30 days from reasonable suspicion to reasonable belief, and to strengthen judicial oversight by ensuring that there is a full merits-based review of designation decisions. Those are important new safeguards that will make the asset-freezing regime significantly fairer, more proportionate and more transparent, and I welcome the endorsement that they have received from hon. Members today. However, we have also heard in today’s debate, and read in the report of the Joint Committee on Human Rights, some calls for the Government to go further and introduce more civil liberties safeguards. I wish to respond to those points.
One concern that has been raised is that reasonable belief is still too low a threshold for freezing assets, and that the Government should be able to do so only on the balance of probabilities—in other words, if someone is more likely than not to be involved in terrorism. It has even been argued that asset freezes should be imposed only in cases of criminal charge or conviction. I shall reiterate why the Government do not agree with, and cannot support, those proposals.
To meet our UN obligations and protect national security, asset freezing must be preventive: that is, it must be capable of being used at an early stage to disrupt and prevent terrorist attacks. Setting the legal test higher than reasonable belief would make it more difficult to use the asset-freezing tool in a preventive manner, and therefore make it less effective because the level of evidence needed may rule out the use of asset freezing when it could be most useful.
Dr Huppert
Does the Minister genuinely think it appropriate to freeze people’s assets when the Treasury believes that it is more likely that they are not involved in terrorism than that they are so involved?
Mr Gauke
I reiterate that it is necessary to have a tool available to use at an early stage, for preventive reasons. The asset freezes imposed on those suspected of involvement in the transatlantic plane bomb plot in 2006 provide a good example of the value that preventive asset-freezing can have for national security. It is important that we preserve that element of asset-freezing. In the Supreme Court, Lord Rodger spoke of the nature of intelligence and the need, sometimes, to act on information that is fragmentary and not certain. For the same reason, the Government cannot support limiting asset-freezing to those charged with, or convicted of, a terrorist offence.
Although a significant majority of those in the UK whose assets have been frozen have been charged or convicted of a terrorist offence, limiting freezing to such people would have two significant drawbacks. First, preventing the Treasury from freezing assets when it reasonably believes that someone is involved in terrorism and when it considers that asset-freezing is necessary to protect the public, but when a person has not been, or could not be, charged, would incur a significant cost for national security. Secondly, limiting freezing in that way would severely curtail the Treasury’s ability to freeze the assets of international terrorists or terrorist groups operating overseas. Many such persons and groups operate in countries where they will not be prosecuted, perhaps because the country does not have the capability or the will to prosecute terrorists.
Dr Huppert
I understand the Minister’s point about those not in Britain, but what about those who are, and hence subject to our controls? Given that the threshold for powers of arrest is reasonable suspicion, does he agree that anyone who has enough evidence to freeze assets would also have enough evidence to arrest?
Mr Gauke
Given the flexibility that we need, I believe that we have struck the right balance by allowing an interim arrangement on the basis of reasonable suspicion followed by a longer-term arrangement on the basis of reasonable belief. Sometimes, it is a question of timing and we may need to act first on freezing assets and subsequently to make an arrest—we must remember that after all, the vast majority of those in the UK who have been subject to a freezing order have gone on to be arrested. For example, if we limited the Treasury’s freezing powers to those charged or convicted, we could prevent the UK from co-operating with international partners when we are trying to prevent funding getting to international terrorists and terrorist groups. For those reasons, the Government remain convinced that the legal test as set out in the Bill—reasonable suspicion for an interim period of 30 days and reasonable belief for a final designation—strikes the right balance.
My hon. Friend the Member for Cambridge mentioned the role of the courts, which has also been raised by civil liberties groups. They have called for a mandatory court involvement in asset-freezing. They want freezing decisions either to be made by the courts or to be approved by them mandatorily, but the Government do not support those proposals. Decisions to freeze assets are national security measures taken on operational advice from law enforcement and intelligence agencies, and fall squarely within the remit of decisions that Ministers should and do make on other matters, such as prescription, deportation and exclusion. Ministers are accountable for their designations both to Parliament and to the courts.
We also do not believe that mandatory court approval for asset freezes is the right approach. Only a very small minority of asset-freezing cases—around 10% of current cases—concern people in the UK who have not been prosecuted for a terrorist offence. The remaining 90% of cases concern either individuals in the UK who have been prosecuted or individuals and groups overseas. Mandatory court approval would therefore add no value in those 90% of cases. Indeed, it might even be unhelpful. For example, overseas terrorist groups who do not currently challenge asset freezes would nevertheless have their designations subjected to mandatory court scrutiny.
My hon. Friend also mentioned written reasons. We heard today that the JCHR recommends that an express requirement to provide reasons for a designation, subject to public interest requirements of non-disclosure, be written into the Bill. The Committee’s reasons for that were eloquently put, but the Government are not convinced that an express obligation on the Treasury to provide reasons for a person’s designation is necessary. It is already a requirement of the basic principles of administrative law to provide reasons for a designation where possible, subject to public interest requirements. If this Government or any other were to write into a Bill all the Treasury’s obligations under administrative law, such a Bill would be considerably longer. I do not see that as desirable. The time available for parliamentary scrutiny should not be spent debating unnecessary provisions. I should also make it clear that there will be times when the Government cannot divulge the case against a person or the reason for a designation, such as when sensitive intelligence has been relied on for a decision and there is an obvious case for withholding information. None the less, where possible, the Government disclose information when that can be done without, for example, damage to a pending prosecution or to national security. There is no sensible reason to go beyond that and write such a requirement into the Bill.
The JCHR also sought to convince hon. Members that the Government should accept the principle set out in the House of Lords in the case of AF on the use of special advocates and closed-source material. It said that that principle should apply to asset-freezing provisions. I am sure that hon. Members have read Hansard and are aware of the debate on that in the other place. I can but restate the points that the Government made then. First, the courts have not considered whether AF applies in asset-freezing cases, and it is not the role of the Government to prejudge what the courts would say. Secondly, the Supreme Court will consider the wider application of AF (No. 3) in January 2011 when it hears the Tariq case. Thirdly, the Government are committed to ensuring that any challenge to a Treasury decision is heard fairly. Finally, the application of AF (No. 3) is part of a wider debate on the use of special advocates and intelligence material, and we have already announced that we will be considering the use of special advocates and closed-source evidence as part of a Green Paper next year.
There will be plenty of opportunity for the JCHR and other interested parties to relay their views as part of the consultation that informs that Green Paper. It is right and proper that the Government give all parties the option of commenting on such an important mechanism without prejudging the outcome.
The final matter raised by the JCHR is the question of transparency and accountability. The Bill strengthens transparency and accountability in two ways. First, we are enshrining in legislation the Treasury’s existing practice of presenting quarterly reports to Parliament on the operation of the powers in the Bill. That will guarantee transparency on the quarterly operation of the regime. Hon. Members will note that the most recent quarterly report was laid today. Secondly, we have written into the Bill that the operation of the regime should be independently reviewed nine months after the Bill is passed and every 12 months thereafter.
The JCHR maintains that the provision in the Bill for an independent reviewer does not go far enough and that the independent reviewer should be more independent of the Government—the right hon. Member for Delyn made that point in the debate. I am sure that that will be debated further in Committee, but the Government cannot accept the JCHR position. We are committed to effective scrutiny of the asset-freezing regime and the independence of the reviewer will be a principal objective of any appointment, but for Parliament to approve the independent reviewer would be a significant departure from standard practice. The appointment of the reviewer by the Government reflects the long-standing principle that Ministers are directly accountable to Parliament and the public for those whom they appoint and for the operation of the regime.
Mr Hanson
I tend to agree with the Minister, as I indicated in my discussions, but can he tell the House whether the reviewer for this piece of legislation is likely to be the same one as is currently in post, which is Lord Carlile, who is soon to be replaced by David Anderson QC?
Dr Huppert
The Government have recently started taking the approach that independent people can be scrutinised by a Select Committee to check that they are sufficiently independent. Could we go down that route to check the independent reviewer?
Mr Gauke
I am on the record many times as arguing why Parliament should have a significant role in a number of public appointments, but in this area we have arrangements whereby Ministers take responsibility and are accountable. We will ensure that the independent reviewer is free to examine any aspect of the regime, and his or her findings and recommendations will be released in full to Parliament. We also think that the Treasury has to have sight of the independent reviewer’s report prior to its being laid before Parliament, but that is only for the entirely sensible and understandable process of ensuring that no material detrimental to national security is inadvertently released. To answer the question specifically, Ministers have to take responsibility on this and we are not inclined to move away from that position.
I wish to address a point made by the hon. Member for Cambridge about ensuring that a designated person has reasonable expenses and is not left in desperate hardship. There is a requirement in law for the Treasury to implement asset freezes proportionately, taking full account of the human rights of a designated person and their family. My hon. Friend the Member for Hexham asked whether a designated person is able to fund their appeal—there was concern that that might not be the case. The Treasury has issued general licences to enable any legal aid payments to be made to a designated person’s solicitors where they are eligible for legal aid and to allow third parties to pay a designated person’s legal expenses. Where a designated person wishes to use their own funds for legal expenses, an individual licence can be applied for. The asset freeze does not, therefore, hinder a designated person from challenging their designation or any other decision, such as to impose particular licence conditions.
I wish also to pick up on the points raised by the hon. Member for Upper Bann. He raised the concern about decisions being taken not to publicise a designation and asked whether there is a danger that third parties are not aware of the designation—that is a perfectly fair point. The offences in the Bill apply only where a third party is aware, or should be aware, of the designation; if they do not know, and have no reason to know, no offence will be committed. I hope that that provides some reassurance to him. Where a designation is not publicised, financial institutions will still be informed, as that helps to ensure that funds are frozen. I reassure him that decisions not to publicise are rare and are always taken for very good reasons, and that the designated person will be told.
I also wish to pick up on the hon. Gentleman’s point about whether someone could be subject to a 30-day freeze on the basis of suspicion and then be subject to another such freeze after the first one is dropped. Freezes cannot be continually retained on the basis of reasonable suspicion by dropping a freeze after 30 days and then reimposing it as the new interim freeze based only on reasonable suspicion arising from the same or substantially the same evidence—clause 6(3) makes specific provision on that. A new interim freeze could be made if there is significant new evidence that significantly contributes to a fresh reasonable suspicion on the Treasury’s part. Without such new evidence, a freeze could be maintained after the 30 days only if there was reasonable belief that the person is involved in terrorism.
I shall now deal with the questions raised by the right hon. Member for Delyn about the overall counter-terrorism review and its relationship with this Bill. This is a stand-alone Bill and it is not intended to be further amended by the counter-terrorism review. The Government have already considered civil liberties safeguards for this Bill and introduced amendments at Committee stage in the other place, as I have mentioned. There is no intention to amend the Bill further.
In conclusion, today’s debate has been about the balance between national security and safeguarding civil liberties. I am convinced that the Bill strikes the right balance between both. It is effective and fair, it takes the necessary steps to prevent the raising and use of funds for terrorist purposes and it sets the terrorist asset-freezing regime in primary legislation for the first time. I commend the Bill to the House and look forward to further discussion in Committee.
Question put and agreed to.
Bill accordingly read a Second time.
Terrorist Asset-Freezing etc. Bill [Lords] (pROGRAMME)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Terrorist Asset-Freezing etc. Bill [Lords]:
Committal
1. The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
2. Proceedings in the Public Bill Committee shall (so far as not usbpreviously concluded) be brought to a conclusion on Thursday 25 November 2010.
3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.
Other proceedings
7. Any other proceedings on the Bill (including any proceedings on consideration of any message from the Lords) may be programmed.—(Angela Watkinson.)
Question agreed to.
Terrorist Asset-Freezing etc. Bill [Lords] (Money)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Terrorist Asset-Freezing etc. Bill [Lords], it is expedient to authorise—
(1) the payment out of money provided by Parliament of any expenses incurred by
the Treasury or any other Minister of the Crown in consequence of the Act; and
(2) the making of payments into the Consolidated Fund.—(Angela Watkinson.)
Question agreed to.