Autumn Budget 2024

Lord Bach Excerpts

Monday 11th November 2024 Lords Chamber

[Lord Bach (Lab)]

My Lords, in many years as a Member of this House, I have never dreamed of speaking in a Budget debate. Why have I changed my mind today? I want to say a few words because this Budget springs from a view of the world—an approach, or a political philosophy, if that does not sound too grand—that, rightly or wrongly, happens to fit in with my own beliefs or, as some opposite might say, my prejudices.

I am particularly excited by its emphasis on stability, combined with its emphasis on investment and growth—getting that balance right is everything. I believe this Budget succeeds here. It does not revert to austerity but is determined to move forward while protecting those who have the least. Its insistence on improving our desperate public services is an essential part of that crucial balance, which has been found successfully by the Chancellor. That balance has been difficult this year, given the economic legacy bequeathed by the last Government. They will have to understand that that legacy is widely and correctly criticised, and it explains the general election result to an important extent. My gentle advice to the Opposition is to stop defending their record, stop beating their heads against a brick wall and move on as fast as they possibly can.

Austerity as a policy is, thankfully, dropped. It did untold harm. I was a police and crime commissioner for five years and, every working day, I saw the effect of austerity on police numbers and on an excellent force’s ability to do the job it wanted to do. Neighbourhood policing suffered badly, and it followed, like night follows day, that anti-social behaviour and other crimes flourished. Austerity was a disaster for the poorest and most vulnerable—not least for the young, with the inevitable closure of youth clubs and other provision.

I am delighted by the plan set out in the Red Book for visible neighbourhood policing to be boosted by 13,000 neighbourhood officers and PCSOs. My concern today—here I remind the House of my declared interest as the chair of the board of trustees of the Leicester law centre—is about law centres and advice centres generally, which give vital legal advice to those who need it at the time that they need it. Given the effective destruction of social welfare law legal aid over the last 14 years, they will struggle to find the increase in employers’ national insurance. That advice, if given, can save money for the state, as well as protecting people’s lives, of course. Although I personally understand the importance of, and support, raising employers’ national insurance as a way of moving forward, I invite my noble friend to look again, if possible, at the issue as it affects the people I have referred to.

I repeat how proud I am of this Budget. I congratulate the Government on having presented a Budget that is both sensible and radical, and that represents the best hope for the future of our country.

Small Business, Enterprise and Employment Bill

Lord Bach Excerpts

Wednesday 7th January 2015 Grand Committee

[Baroness Neville-Rolfe]

My Lords, this group of amendments makes a number of consequential and technical changes to the penalty levels set out in the Bill. The Legal Aid, Sentencing and Punishment of Offenders Act 2012 includes a provision that, once commenced, will remove the upper limit on all fines of £5,000 and above in the magistrates’ courts. The Act also provides a power by order to increase the amounts of maximum fines at levels 1 to 4 available to magistrates for less serious offences.

The Bill was drafted on the assumption that both the £5,000 limit would have been lifted and levels 1 to 4 increased by the time it received Royal Assent. As this is not yet the case, it is necessary for some of the penalties provided by the Bill to be amended to operate satisfactorily whether or not the changes have come into force. The amendments ensure that the penalties in the Bill work whether or not the changes have taken place, without the need for further amendments to the Bill. This future proofing will apply in respect of a penalty for non-compliance with the proposed reporting requirement on payment performance, which we have just discussed.

We have considered carefully the appropriate level of penalties in the Bill. As the majority of the penalties are in Parts 7 and 8, I shall concentrate my remarks on these parts. The penalties in Parts 7 and 8 are designed to be consistent with the level and approach of existing Companies Act penalties. For example, the failure by a company to make its register of people with significant control available for inspection in new Section 790N(2) is subject to a level 3 fine. This is consistent with the existing penalty in Section 114 of the Companies Act for failure to make the register of members available for inspection.

I now turn to Amendments 45, 46, 57 and 58, which affect Schedules 3 and 5 to the Bill. Schedule 5 provides an option for private companies to keep information about their members and company officers on the public register at Companies House instead of having to keep registers containing this information. This option will also apply to the new register of people with significant control in Schedule 3. A company that takes advantage of this option must still keep precisely the same information on the public register as it would keep on its own register. It must keep the information up to date in the same way as it must keep its own register up to date. The aim of the offences and penalties in the new provisions is to mirror the offences and penalties for not adequately maintaining the information required in each company register.

During our review of the penalties, we discovered that there are a couple of instances where the penalties do not mirror each other. Amendments 45, 46, 57 and 58 correct this to ensure that the penalties are consistent. For example, the fine for not keeping a register of members is set at level 3. As currently drafted, the penalty for a company that chooses not to keep a register of members and does not provide Companies House with information about its members is set at level 4. Amendment 58 replaces this with a level 3 fine to ensure that the penalties are consistent. I very much hope that noble Lords will support these essentially technical amendments. I beg to move.

[Lord Bach (Lab)]

My Lords, I thank the Minister for explaining these government amendments so clearly. She will be relieved to hear that we will not seek to oppose them.

Of course, the Minister is right because, more than 32 months after the LASPO Act received Royal Assent, the Government have not got round to implementing Section 85 of it. That Act was a terrible piece of legislation but the one exception to it was Part 3—in which Section 85 is to be found. While I would very much welcome the chance of explaining to the Committee why it was such a dreadful Act, I will resist that temptation this afternoon.

Part 3 deals with sentencing and punishment of offenders and was widely supported across both Houses. I have two questions for the Minister—I am sure they are both quite easy ones for her. First, why have the Government not acted sooner to implement Section 85? It has been almost three years now and the changes required statutory instruments which have just not been brought before Parliament. An explanation would be welcomed by the Committee. Secondly, what are the Government’s proposals now to bring forward those statutory instruments, and will they be completed by the time that Parliament prorogues for the general election? If the noble Baroness is not in a position to answer those two questions now, she can write to me in due course.

Welfare Benefits Up-rating Bill

Lord Bach Excerpts

Monday 25th February 2013 Lords Chamber

[Lord Bates]

The noble Lord is saying that the Official Opposition do not intend to make any pledges, which is interesting because I thought I heard last week that there was a proposal for a mansion tax and that that would be funded by other means. I thought that was a specific spending commitment beyond 2015-16.

My second point picks up on one from the noble Baroness, Lady Meacher, who made a thoughtful contribution. We overwhelmingly agree that the most effective way to alleviate poverty and raise standards is to create jobs. I would have thought that there would be some recognition that the Government’s record on that has been quite reasonable. We would of course like it to be very much better, but contrary to some other countries that are wrestling with the same problems our unemployment rate continues to fall. We now have the highest level of private sector employment in our history and a million new private sector jobs since the last election. That suggests that moves to reform taxation and stimulate the economy are beginning to have some effect, and that they are the best way of tackling this.

We have an Urgent Question coming up on the rating agency decision: the noble Lord, Lord McKenzie, and the noble Baroness, Lady Meacher, referred to this. I was reading through the decision and thinking of making a contribution to the Urgent Question, which I will not now do having secured the Floor in this debate. Moody’s statement,

“explains that the UK’s creditworthiness remains extremely high … because of the country’s significant credit strengths”,

chief among which are,

“a strong track record of fiscal consolidation and a robust institutional structure”.

That is quite interesting. In fact, going beyond that, we are again warned about what could happen to the country’s inflation and the cost of borrowing if the country were to be downgraded again.

Further down, on what could move the rating up or down, Moody’s statement says that,

“downward pressure on the rating could arise if government policies were unable to stabilise and begin to ease the UK’s debt burden during the multi-year fiscal consolidation programme”.

So there is a case for fiscal consolidation. There needs to be a recognition that the Government’s policies of raising tax thresholds and increasing employment are beginning to have some effect.

Notwithstanding that, I come to a point of agreement, which I made at Second Reading: no one on any side of the House is cheering on this measure. It is an economic necessity. It is certainly not something that anyone takes pleasure in.

[Lord Bach]

My Lords, although I am delighted to support these amendments, believing the Bill to be yet another attack by the coalition on the poorest and those in the squeezed middle, I confess to feeling more than a little hard done by being obliged to speak at all to the amendments in this group. The reason for this is that a draft amendment in my name was refused as not being in scope. The draft amendment was to the commencement part of the Bill, on page 2 at line 38, and says:

“Except that no commencement shall take effect until the Secretary of State is satisfied that legal help is available for all claimants who seek legal advice on the validity of the decision on their benefit entitlement”.

At first sight, it sounds as relevant to the Bill as other amendments that grace this Marshalled List, but there it is. My amendment has for some reason ended up on the wrong side of the line. It is not for me to speculate on whether any part of government was asked its view as to the status of my amendment, but I venture the opinion that it may be something of a relief to the Government that my amendment does not stand to be debated or to be voted on at a later stage.

However, I would argue that the principle behind it clearly is relevant to this group of amendments. It could be called a pursuit of justice or, to put it the other way around, the avoidance of unfairness. Because the concentration is rightly on the measures themselves, what is so often left out of the arguments about welfare reform, whether in relation to this Bill or the regulations that we were debating before our half-term break—in this case, the 1% uprating—is what potential real remedy the citizen will be left with if the department’s decision is wrong. Surely the fact that it is wrong in many cases is not in question. We all know that, with the best will in the world, decisions made by the department are often wrong and very much to the disadvantage of those who want to claim them.

For a long time, this has not been a pressing problem. For those requiring legal advice on their benefit entitlements, legal aid has been available—if, of course, these people came within the criteria for legal aid, and many did. For a small amount of legal aid, quality advice has been available, having the effect of both stopping—this is important in cost terms—hopeless claims and establishing good claims where appropriate. It is a system that worked. Putting it at its highest, it has allowed access to justice for all. At a slightly lower level, it has meant that tribunals have not been faced with an impossibly large number of cases, many of which should never have been brought in the first place. It has cost a fraction of the total legal aid budget and is paid to lawyers who are not by any standards well paid. Yet from 1 April, as a deliberate act of government policy, this legal help will no longer be available for anyone in cases relating to welfare benefit entitlements, whether under this Bill or under the regulations and the larger Act passed by Parliament last year.

Thus, people will not be able to get the advice to which they are entitled. Their access to justice will be gone. The department will get away with wrong decisions and tribunals will be overburdened with what I can only describe as rubbish cases—all to save £25 million per year on welfare benefit advice. Perhaps I may remind the House and this Committee that that is one-tenth—I repeat, one-tenth—of the amount set aside by the Department for Communities and Local Government so that there can be weekly rather than fortnightly collections of rubbish. Is this really a proper sense of priorities for a time of austerity?

Further, everyone who knows anything about this agrees that this is not likely to be a saving at all in the end. The state—I fear that it will be the department as much as any other department and perhaps the Treasury—will eventually have to pick up the pieces when things get much worse than they need to. What does the Minister, for whom I have a high regard, have to say about this? What does he say to those who under this Act will not be able to query a wrong decision about their entitlement? They will not be able to do that because they will not be entitled to legal aid for legal advice as to whether a mistake has been made. How can the Minister or any Government justify this either in terms of common decency, which should appeal to this House and normally does, or even under the rule of law?

--- Later in debate ---

[Lord Newby]

My Lords, that is an extremely good point. It demonstrates that there is no simplistic relationship between tax rates and the amount of tax collected. In some cases there is and in some there is not. The trick of government is to understand the difference between the two. Frankly, I do not believe that the Opposition have reached that point.

The noble Lord also talked about tax avoidance and conflated wealthy people avoiding tax and the situation relating to Starbucks. On the question of Starbucks and profit shifting, the Government, along with the French and Germans, have started a process with the OECD—something that the previous Government never did—to change the basic global accounting rules so that we can get to the bottom of corporations that are shifting their profits to low-tax jurisdictions. This holds the prospect of being successful in the medium term, but whatever it does it will have no impact on the effectiveness of the Government’s treatment of individuals. As we have debated many times in recent months at Question Time, the new focus that HMRC is putting on going after people who are avoiding and evading tax is generating many billions of pounds more in income. While the previous Government cut the number of HMRC people working on compliance by 10,000, this Government have already increased it by 2,500 and will increase it further.

I was very taken by the comments of the noble Baroness, Lady Afshar, on extended families. In the past year, employment has increased by more than 500,000 and I am unaware of any differential effect on the minority ethnic communities such that small firms in those communities have been shedding jobs disproportionately. Perhaps they have, but I have not seen any evidence. One of the more welcome developments of the past year, which has surprised a lot of commentators, is that hundreds of thousands more people are in work, and this increase in employment has taken place disproportionately in regions other than London and the south-east. There has been a slight rebalancing of employment prospects, and regions such as Yorkshire and the Humber, which I know, have done remarkably well in difficult economic times. I completely support the noble Baroness’s view about the moral economy of kin, but I question whether what has happened in recent months has undermined it to the extent that she suggested.

Finally, the noble Lord, Lord Bach, implied—very gently; I know that he did not really mean it—that the Government might have influenced what amendments were considered to be in scope of the Bill. He knows, as we all know, that the Government have no power to determine what is in scope of the Bill.

[Lord Bach]

Of course I did not imply that for a moment—and I think that the Minister knows that. However, when there is some doubt about whether an amendment is in scope, there would be nothing wrong in the authorities asking both the Government and the person who might be tabling the amendment for their thinking on the issue. The decision is of course for the authorities and nobody else, but there would be nothing wrong in inviting the views of, for example, an experienced Bill team, as I am sure the Minister has backing him. I was not suggesting for a moment that the Government could use their influence, as the Minister put it, to decide for the authorities, which will make the decision themselves, as always. My point was that if the amendment had been allowed in, I suspect that the Government might have been in trouble in a vote at a later stage Bill. That was all that I was saying.

[Lord Newby]

I am extremely sorry if I misunderstood the noble Lord.

In conclusion, I repeat that the amendments in this group would mean that the Bill would not deliver on its purpose of enabling the Government to set out clear and certain plans to control welfare spending and help secure the economic recovery. That is why they should be resisted.

Terrorist Asset-Freezing etc. Bill [HL]

Lord Bach Excerpts

Monday 25th October 2010 Lords Chamber

[Lord Lloyd of Berwick]

My Lords, I intend to address the amendments that relate to the final order, and I therefore wish to degroup the amendments that relate to the intermediate order.

It seems that the Bill has attracted little public attention, except from our own Constitution Committee, which was very critical of the Bill, and from bodies such as Liberty and Justice, which are even more critical. Liberty and Justice state in their briefing paper that they have four major concerns. The purpose of my amendments is to meet at least some of those concerns.

The purpose of the Bill is to give effect to Security Council Resolution 1373, following the decision of the Supreme Court in the case of Ahmed, which quashed the orders made by the Treasury. The Bill was first drafted by the previous Administration, but that does not matter, because the starting point of its drafting should surely have been the decision of the Supreme Court in the Ahmed case and the light that it throws on the meaning and effect of Resolution 1373.

Reading the Bill in July, my immediate impression was that Ahmed had been very largely ignored. The Bill simply puts on a statutory basis, as was required, the provisions of the Terrorism Order 2006, but ignores the very serious criticisms that the Supreme Court made of the order. To make that good in Committee, I referred to a paragraph in the judgment of the president of the Supreme Court, the noble and learned Lord, Lord Phillips. Afterwards, I wrote to the noble Lord, Lord Sassoon, to explain the difficulties that I had with the Bill, and he was courteous enough to reply. I make no apology for repeating the words of the noble and learned Lord, Lord Phillips, because they are central to what is wrong with the Bill. Having referred to paragraph 1(c) of the critical resolution, he continued:

“Paragraph 1(c) requires the freezing of the assets of those who commit the acts that the Resolution has required should be criminalised and their agents. Thus what the resolution requires is the freezing of the assets of criminals. The natural way of giving effect to this requirement would be by freezing the assets of those convicted of or charged with the offences in question. This would permit the freezing of assets pending trial on criminal charge, but would make the long term freezing of assets dependent upon conviction of the relevant criminal offence to the criminal standard of proof”.

I emphasise those words and the sentence that follows:

“The Resolution nowhere requires, expressly or by implication, the freezing of the assets of those who are merely suspected of the criminal offences in question”.

I turn now to what the noble Lord, Lord Sassoon, said in the debate in Committee on 6 October. He said:

“The Government do not support moving to a higher legal threshold than reasonable belief, for example by imposing asset freezing only on those who have been convicted of a terrorist offence. Such a move would undermine the preventive nature of the regime”.

I will come back to that. The noble Lord said that such a move would also,

“be incompatible with international best practice and the aims of the United Nations Security Council resolution”.—[Official Report, 6/10/10; col. 122.]

With great respect, that is simply not correct. To make the commission of a terrorist offence the threshold of a freezing order could not be incompatible with the aims of the resolution, since, as I have just read out, that is what paragraph 1(c) specifically requires. States are required to freeze without delay the assets of persons who commit or attempt to commit terrorist acts—nothing less, nothing more. There is no mention anywhere in the resolution of those suspected of committing terrorist acts.

If it is then said that in the passage that I have read the noble and learned Lord, Lord Phillips, was, as it were, on a frolic of his own, then what about the noble and learned Lord, Lord Mance, at page 451 of the judgment? At paragraph 225, he said:

“The relevant wording of Security Council Resolution 1373 … is directed at the prevention and suppression and the criminalisation and prosecution of actual terrorist acts; at the freezing of funds or other financial assets or economic resources of persons ‘who commit”—

again, the same words—

“or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts’”.

A little later, he went on to say that the wording of paragraph 1(c),

“does not suggest that the Security Council had in mind ‘reasonable suspicion’ as a sufficient basis for an indefinite freeze”—

what we here call a final order. I would add that nor is there any suggestion that the Security Council had in mind “reasonable belief”, as opposed to “reasonable suspicion”.

At paragraph 197 of the judgment, the noble and learned Lord said that reasonable suspicion,

“goes well beyond the strict requirements of Resolution 1373”.

The noble and learned Lord, Lord Brown, said exactly the same at page 196. I need not refer to his language because it replicates that of the noble and learned Lords, Lord Mance and Lord Phillips.

The only justice to have expressed a contrary view was the noble and learned Lord, Lord Rodger, at paragraph 170, but none of the other six judges agreed with him. Therefore, in my submission there is no doubt at all about what the Supreme Court decided. That is put very well in the rather lengthy head note, of which I should perhaps refer to a very small part. It said that the appeals would be allowed because Resolution 1373 was not phrased in terms of reasonable suspicion, so by introducing such a test the terrorism order went beyond what was necessary or expedient to comply with the relevant requirements of the resolution and that accordingly the terrorism order was ultra vires the powers conferred. Therefore, again, there is no doubt about what the court decided. However, when this Bill was being drafted, those responsible for the drafting must have read the speech of the noble and learned Lord, Lord Rodger, but overlooked the speeches of the three noble and learned Lords to whom I have referred and what, on any view, was the actual decision of the court. I hope that, when he comes to reply to this amendment, the noble Lord, Lord Sassoon, will accept that my amendments are not in any way incompatible with Resolution 1373—indeed, quite the opposite. They give meaning and effect to the resolution in precisely the way that the Supreme Court indicated.

As a result of the Second Reading debate, and in particular the speech of my noble friend Lord Pannick, the Government now accept that “reasonable suspicion” is not good enough and instead they have substituted “reasonable belief”. The noble Lord, Lord Rodger, said that it is very difficult to say how much difference there actually is in practice between those two. I think he describes suspicion as being “only a little less stringent than belief”, or words to that effect. Whatever the precise difference between those two, surely it is clear that exactly the same argument, which has led the Government to accept that suspicion is not good enough, must also apply to what they have now substituted; namely, belief.

It is true that belief will catch fewer innocent people than suspicion, which I assume to be the reason for the change, but I doubt whether it will make much difference. The point remains the same: that belief, like suspicion, casts the net too wide; it is far wider than the resolution requires, so that more innocent people will inevitably be caught. That is why it is so important to keep to the words of the resolution and not to change the essential nature and target of the resolution. I put it to your Lordships that that means the final order must be confined to those who have been arrested and charged with a terrorist offence and that is what will be achieved by my amendments, if they are accepted. I beg to move.

[Lord Bach]

My Lords, to my surprise, I shall be speaking early in these proceedings but I enter the fray at a rather late stage of the Bill because my noble and learned friend Lord Davidson of Glen Cova cannot be here today. However, on this Bill I am not to be allowed gently to put my toe in the water. The House is dealing with important amendments tabled by the noble and learned Lord, Lord Lloyd of Berwick, to whom I want to pay tribute. He has a deserved reputation for knowledge and expertise, particularly in this area, going back many years. I have also had the experience of debating with the noble and learned Lord on a number of occasions when sitting on the other side of the Chamber. Although he is always a model of courtesy, good manners and, of course, persuasion, I have no doubt that those who have succeeded me will find his arguments as difficult to deal with as I did. However, I say with the greatest respect, that does not always mean he is right.

Today, we on this side believe that the noble and learned Lord is wrong in limiting final determinations only to those cases where a person has been charged with a criminal offence under Clause 2(2). Why do we think that? In essence, we think that such a step would be impractical and would not work in the real world. Reading through the Committee stage debates, I was impressed by the arguments employed by the noble and learned Lord, Lord Wallace of Tankerness, in dealing with this issue. It seems to us that his arguments are powerful. On 6 October, he said:

“Unlike control orders, asset freezing is not only used against people in the United Kingdom who cannot be prosecuted or deported. In fact, only around 10 per cent of asset-freezing cases involve people who are in the UK or hold funds here and are not being prosecuted for terrorist offences”.

The noble and learned Lord went on to say:

“The noble and learned Lord, Lord Lloyd of Berwick, indicated that he thought that those who were subject to designation should also be prosecuted. I asked how many people who have been subject to asset freezes have been prosecuted”.—[Official Report, 6/10/10; col. 150.]

He was advised that 21 individuals in the UK had been convicted for terrorism offences, and that six people within the UK have not been prosecuted. He went on to say that he had asked his officials how many persons outside the UK had been subject to designation for asset freezing, and that the answer was 36, of which 22 were entities and 14 were individuals. He said that it would just not be possible to prosecute them. That is, in essence, what the noble and learned Lord said at the Committee stage of these proceedings.

The trouble is that if one had to charge before making a final designation order, many of those whose assets one would want to make an order against might not be in the jurisdiction, might not be likely to be in this jurisdiction, or might have skipped the jurisdiction as fast as they possibly could. Why should they escape the making of a valuable order if it would assist in the fight against terrorism? That is why we think that in the real world, where a considerable number of the people who one would want to make an asset order against are abroad and not within the jurisdiction, there should be power to make such an order, because if there were not, there would be a serious lacuna in the law.

[Lord Lloyd of Berwick]

My Lords, before the noble Lord sits down, I hope that he will deal with that point a little more fully as it is quite important. Is he arguing that Clause 1 has extraterritorial effect? If so, that is not stated in the Bill. Indeed, the Bill specifically provides that the offences provision in Chapter 2 is to have extraterritorial effect, but there is nothing in the Bill to suggest that we can serve persons abroad. It applies only to our own nationals and to people within this country in the ordinary way.

[Lord Bach]

I have to admit that I do not know the answer to the noble and learned Lord’s question. However, I am concerned about the position of a UK citizen who goes abroad and who therefore cannot be interviewed and perhaps afterwards charged with an offence, and who because of that fact cannot have an order made against his assets. As I understand it, having read the letter from the noble Lord, Lord Sassoon, in response to the Joint Committee on Human Rights, that actually happens in real life.

[Lord Lloyd of Berwick]

I will not take up the noble Lord’s time further, but I shall obviously need to deal with that matter with the Minister who no doubt has given consideration to this important point.

--- Later in debate ---

[Lord Mackay of Clashfern]

Noble Lords can hardly expect me to remain silent while that remark is made. I support the amendment moved by the noble Lord, Lord Pannick. So far as I can judge, it seems to be appropriate in its wording. If the Government were willing to accept the principle, they might wish to consider the precise words. There is also the question of whether the same principle should not apply in relation to Clause 27, where a judicial review provision is in question. The remarks of the noble Lord, Lord Pannick, apply as much to judicial review as to any other form of order in administrative law. Therefore, it is worth considering—if the Government decide to accept this amendment or something like it—whether something of the same kind should go into Clause 27 as well. It is obvious that if the Government think this is something that should happen, it is unwise to leave it on Pepper v Hart. However good the noble Lord, Lord Pannick, thinks that decision is, it would be rather better to put it in express provision, which in any event saves a certain amount of litigation.

[Lord Bach]

Briefly, I can say only to the noble and learned Minister: plus ça change. Here I am, supporting in what I am about to say the suggestion made by the noble Lord, Lord Pannick, in his amendment. I do so in rough terms; I am not in any way inviting him to test the opinion of the House on it today. This is surely a matter that can be dealt with in some more satisfactory way than that. The noble Lord seems to have a point, backed up as he is by the noble Lord, Lord Lester, and the noble and learned Lord, Lord Mackay of Clashfern. I ask the Minister this simple question. Presumably he will argue that,

“such order as it considers appropriate”,

includes damages. If the answer to that question is yes, can there be any reason not to put that in the Bill in express terms, for the reasons stated by the noble Lord, Lord Pannick?

[Lord Wallace of Tankerness]

My Lords, in responding to an amendment moved by the noble Lord, Lord Pannick, I feel somewhat guilty as I do not feel able to go so far as my noble friend Lord Sassoon in offering concessions. However, I welcome the noble Lord’s amendments as they have given us the chance to have a very useful discussion. Notwithstanding the points that have been made about the adequacy or inadequacy of Pepper v Hart statements in providing clarity, I hope that the noble Lord, Lord Pannick, will feel that sufficient clarity is provided.

This amendment relates to the debate that we had in Committee about the avenues available to a person who has suffered loss as a consequence of an asset freeze to obtain compensation. During that debate, the noble Lord, Lord Pannick, the noble and learned Lord, Lord Davidson of Glen Clova, and my noble friend Lady Noakes were particularly keen for the Government to indicate their position on this point, and I shall try to do so.

The amendment of the noble Lord, Lord Pannick, would provide that the court can, in relation to appeals by designated persons against designation-related decisions, award damages if and to the extent that the court thinks it just and appropriate to do so. The noble Lord has tabled the amendment following our discussion on the scope of the orders available to be made by the court under Clause 26(3). In that discussion I drew the Committee’s attention to that provision and indicated that,

“it would be possible, in connection with a successful challenge against the designation, for the person to claim damages, and it would be open to the court to award damages to a successful applicant”.—[Official Report, 6/10/10; col. 193.]

I was not suggesting—as my noble friend queried; and I am grateful for the opportunity to set the record straight—that it would be open to the court to award damages,

“simply for the invalid nature of the designation”.

As the noble Lord rightly observed then, and repeated tonight, that would be contrary to,

“the general principle of … administrative law … that the law does not normally provide compensation for those who have suffered direct loss as the result of invalid administrative action”.—[Official Report, 6/10/10; col. 194.]

It is not the Government’s intention to overturn that principle. However, it is the case that a designated person appealing a designation-related decision under Clause 26 can in certain circumstances make a damages claim in connection with that appeal. I apologise to your Lordships’ House if I did not make that distinction clear.

To clarify the effect of Clause 26(3), the orders that a court may consider appropriate in connection with an appeal of a designation could include, for example, an order to revoke the designation, or the renewal of it, or an order to uphold the designation. It would be open to a designated person to include in these, or subsequent, proceedings claims for damages under the Human Rights Act, as I believe my noble friend Lord Lester indicated, such as breach of the person’s right to enjoyment of property under Article 1 of Protocol 1 as a consequence of being invalidly designated, or—as I indicated in relation to the previous amendment— breach of Article 8, the right to respect for private and family life.

There have been relatively few legal challenges to designations, but where such challenges have been made a number of them have either included Human Rights Act damages claims or have given rise to separate Human Rights Act damages claims. Those claims which are being pursued are at a very early stage and as yet there has been no judicial determination of any of them. It may also be possible—although I appreciate that this would be more difficult—to found claims in tort or delict.

My noble friend Lady Noakes raised in Committee concerns about persons other than the designated person suffering loss as a result of a designation. Nothing in this Bill is intended to change the existing grounds—whether as a matter of the law of tort or delict or under the Human Rights Act—on which anyone affected by an asset freeze, whether the designated person, such person’s spouse or other family member, or any other third party, can claim damages against the Treasury if they believe that they have suffered loss as a consequence of an unlawful asset freeze.

In relation to loss suffered by both designated persons and persons other than designated persons, I should like to make one further crucial point. The purpose of the asset-freezing regime is to prevent the diversion of funds and economic resources for terrorist activity. It is the Treasury’s policy as far as is possible and consistent with that aim to license the use of funds and economic resources. The licensing regime successfully mitigates the impact on designated persons, their families and other third parties of an asset freeze. The general presumption is that a licence will be granted unless there is a risk that the transaction carries a risk of funds being used or diverted for terrorist purposes. Where third parties are affected, the power to grant a licence is exercised so as to ensure that, so far as is possible, no loss is suffered by any third party. For example, where payments to a family member or other third party would be prohibited because the designated person would thereby receive a significant financial benefit—for example, the discharge of a debt owed by the designated person—the Treasury can license such payments. Similarly, payments by a designated person to a third party in respect of, for example, contractual debts owed by the designated person to that third party are capable of being licensed.

I have heard the request that it would be useful to put something in the Bill. My concern is that although that might to some extent allow the individual to look at it and not necessarily contact a lawyer—however, I rather suspect that in many cases a lawyer will be quickly contacted—it might not cover the ingenuity of lawyers. If you put something in the Bill, it might seem to be limiting whereas lawyers might use their ingenuity to come up with other grounds under the Human Rights Act under which a claim could be made in the context of appeal proceedings or other proceedings. I shall certainly reflect on what has been said but I—

--- Later in debate ---

[Lord Carlile of Berriew]

My Lords, I join in asking my noble friend to consider very carefully the proposal put forward by the noble Lord, Lord Pannick. I agree entirely with the noble and learned Lord, Lord Mackay of Clashfern, that there is no logic to saying that different principles will apply to asset-freezing cases from those that apply to control order cases.

[Lord Bach]

My Lords, I was very well assisted by the report that the committee brought out, and by the paragraphs referred to by the noble Lord, Lord Lester. The Government of whom I was a member set up the special advocate system in order to deal with what was and remains a very difficult issue around terrorism. However, we recognise that there are difficulties with it that any Government will have to deal with in due course. On balance, we do not think that the Bill is the appropriate vehicle to make sweeping changes of principle on the issue of the special advocate system.

I have a couple of questions that I should like to ask. This may be a short debate, but the issue may be one of the most important that we debate this afternoon. As my noble friend Lord Davies of Oldham said in an earlier debate, this matter calls into question the balance between civil liberties and security—it is right at the heart of that argument. Any Government of whatever complexion will have to deal with this, day by day and month by month. I take the point made by the three noble Lords who have spoken already that it is difficult to understand why the Government argued in Committee that the regime for control orders is not the same as that for asset freezing, particularly as it relates to the special advocate system. In the end, it seems that the same rules will have to apply, whatever they are. I hope that the Minister will deal with that point when he sums up the debate. What are the differences between the two regimes, especially in relation to the special advocate system?

I am aware that there is to be a Green Paper on this vexed issue in 2011. Will the Minister confirm that that will not be December 2011, as presently planned, but more like the middle of the year? I also understand that there is likely to be a case, perhaps on point, that the Supreme Court will be asked to decide, and which will be heard very early next year, with the judgment expected in good time for the Green Paper.

Those are my questions. Despite what I have said, I hope that the noble Lord will not press the amendment. It needs some careful consideration. However, the points that have been made are powerful and must be dealt with at some stage.

[Lord Wallace of Tankerness]

My Lords, as the noble Lord, Lord Bach, indicated, this has been a short but fundamentally important debate. As he also indicated, it focuses on the challenge and dilemma of balancing the interests of liberty and those of security. I know that the noble Lord, having relatively recently been in government, had to do that himself. These are not easy issues to determine. It is important to recognise, too, that they are issues with which the Government constantly wrestle. It is fair to say that in its preliminary report—I welcome the fact that we have that report to help us today—the Joint Committee on Human Rights acknowledged the amendments that were moved in Committee and welcomed the Government’s willingness to consider the human rights issues raised during the debate at Second Reading and their amendments to the Bill, which are designed to improve the balance between national security and human rights in the asset-freezing regime. This is an issue of which Ministers are acutely conscious as they constantly try to ensure that the balance is correct.

Amendment 23, moved by the noble Lord, Lord Pannick, seeks to create a new subsection within Section 67 of the Counter-Terrorism Act 2008 that would apply to the content of the court rules about disclosure in financial restrictions proceedings and to court rules made in relation to challenges to decisions under the Bill. The amendment would require the court rules, which are to be made initially by the Lord Chancellor for England and Wales and Northern Ireland, to ensure that the Treasury provides sufficient open disclosure to enable the designated person to give instructions to the special advocate. As has been reflected in some contributions to the debate, the form of words is based on the European Court of Human Rights judgment in A, which was applied by your Lordships’ Judicial Committee in AF and Others to the stringent control orders that it was considering. The effect of the amendment is to apply AF (No. 3) to challenges to final designations.

As was foreshadowed in the letter of my noble friend Lord Sassoon to the committee, the Government do not support this amendment, and I shall explain why. I start by stressing a fundamental point on which I know there is common ground all round the House. Designated persons must have the full protections afforded to them under Article 6 of the European Convention on Human Rights; namely, the right to a fair hearing.

Section 67(6) of the Counter-Terrorism Act 2008, which is imported into the regime for dealing with asset freezing, is absolutely clear that nothing in that section, or in rules of court made under it—they include provisions relating to the Treasury’s disclosure of information only to the court and a special advocate—requires the court to act in a way that is inconsistent with Article 6 of the ECHR. It is important to emphasise that the judge also has an important role to play in challenging the closed material and in weighing the impact that non-disclosure has on the fairness of the proceedings. The court determines whether material should be withheld, and the disclosure process is designed to ensure that the maximum amount of material that can be disclosed to the individual without damaging the public interest is disclosed.

The Government and the legislation are absolutely clear that Article 6 rights apply in full to asset freezing. Therefore, it would be inaccurate to say—and I do not think that this was suggested—that advocates of the amendment support Article 6 rights while the Government do not. To make it clear, not only do the Government support Article 6 rights but those rights are there in the Bill by reference to the Counter-Terrorism Act 2008.

I hope that there is broad agreement that the legal position regarding the application of AF (No. 3) principles to asset freezing has not been fully determined by the courts. That is probably a matter of fact but it is clear that different views are being expressed in the House this evening regarding the applicability of the decision in AF (No. 3) to asset-freezing designations. Of course, the courts have determined—indeed, it was determined in the case itself—that AF (No. 3) principles apply to stringent control orders and to financial restrictions proceedings under the Counter-Terrorism Act 2008. That was the subject matter of the case to which the noble Lord, Lord Pannick, referred. However, the courts have not yet determined that AF (No. 3) principles apply to asset-freezing cases. The Government’s view is that it would certainly be wrong to say that legally there is no room for doubt on this.

I shall now seek to address the points that the noble Lord, Lord Pannick, made in moving the amendment. When the Bill was discussed in Committee, I indicated that in the Government’s view the principles do not apply to asset freezing because, although I do not in any way wish to minimise their significance or importance, asset freezes do not have the same impact on individuals as stringent control orders, nor are they as wide-ranging in their financial and economic impacts as decisions to impose financial restrictions under the Counter-Terrorism Act 2008. Perhaps I can assist the noble Lord, Lord Bach, who asked me to identify some of the distinctions. Asset freezes are not of the same nature or magnitude of interference, because they restrict the rights to property and indeed can be modified or alleviated by licences, whereas control orders restrict people’s liberty, communications and movement. As I said, I do not in any way diminish the seriousness of asset-freezing designations but, in our argument, their impact is not of the same magnitude as that of stringent control orders. However, it is open to the courts to determine whether the Government’s position is to be challenged.

It is certainly possible to draw a distinction in the case of Kadi, which was determined by the European Court of Justice. That judgment concerned the process followed by the European Commission in listing Kadi, and the Government would certainly argue that it had no direct bearing on the process to be followed by the United Kingdom Government in applying asset freezes domestically against persons believed to be involved in terrorism. We believe that the European Court of Justice judgment in Kadi is separate from the question of whether AF (No. 3) principles should apply to asset freezes. Likewise, in the Bank Mellat case, which was determined in May this year, the court’s rulings on disclosure were specific to the cases concerned and there was no general ruling on whether AF (No. 3) should apply in asset-freezing cases. The court ruled that the application of AF (No. 3) applied in the context of financial restrictions imposed against the Iranian bank, but the circumstances of such financial restrictions, where the Treasury issued a direction that the UK financial sector must cease dealings with the bank, were very different from those where an individual is subject to an asset freeze because of his alleged involvement in terrorism. Therefore, I do not think that a direct read-across of the court’s ruling is right, applying the specific circumstances under consideration to the freezing of terrorist assets, where different considerations may well apply.