Scotland: Constitutional Future

Lord Davidson of Glen Clova Excerpts

Tuesday 10th January 2012 Lords Chamber

[Lord Davidson of Glen Clova]

I thank the noble and learned Lord for repeating the Statement and add my gratitude for its notice. I trust that this will be a precedent for future practice.

The Statement is welcome, clear and, up to a point, informative. It opens discussion of what for too long has been either ignored or suppressed—namely, the legality of the Scottish Government’s proposals for a referendum. It should also have the benefit of obliging the Scottish Government to engage in open discussion on this important constitutional issue. It appears already to be succeeding at least in getting the First Minister to say that he will reveal within days his constitutional plans, which people have been asking him to reveal for quite some time. There is no doubt that the referendum will take place and what we must now do in all parties is work together to ensure that it is fair, legal and commands the respect of people in Scotland.

The democratic rights of people resident in Scotland have recently been prayed in aid by the Deputy First Minister. Democratic rights throughout the UK of course rest on the rule of law. That such an important issue be dealt with in a clear and lawful manner is something that all interested in democracy have a right to expect. The legal position should surely have been clear to all for some time but this has apparently not been accepted in certain quarters. On such an issue, frank and open discussion is the lifeblood of democracy. Secrecy and obfuscation may be clever gamesmanship, but they help no one, least of all the Scottish electorate, to understand complex constitutional issues.

The Government are to be congratulated on expressing their legal understanding openly and clearly, and we wait to see whether that openness is reciprocated by the Scottish Government. What, it may be asked, is the position of the Scottish Government on the legality of the Scottish Parliament proposing a referendum? There have been curious twists and turns as to how a referendum might be likened to an opinion poll and somehow have nothing to do with the constitution. That has been recognised as obvious nonsense.

The Scottish Government have a duty to make clear their position in relation to the legality of their own referendum, opinion poll or whatever. Anything less leaves them open to accusations of dissembling and trickery. The Government have made clear the view of UK law officers on this issue. Surely we are now entitled to know the view of Scottish law officers. If there were any genuine dispute, the issue might be taken to the Supreme Court for resolution. If there is no such genuine dispute, we can all get on with discussing, in a mature and less rancorous manner, how the referendum is to be organised for the benefit of all concerned.

I have five questions for the noble and learned Lord. First, if the Scottish Government produce contrary legal advice regarding the legality of the referendum, will the Government take the issue to the Supreme Court?

Secondly, Her Majesty's Government propose a Section 30 process to devolve powers for a referendum as their preferred option. But that, as with a Legislative Consent Motion, might give the Scottish Parliament a veto. Are the Government not anxious to avoid any such veto and has that been considered? Thirdly, as the noble and learned Lord will be aware, the First Minister says that he wishes to extend the franchise for his referendum—but only that—to 16 and 17 year-olds. Will the proposed consultation look at this issue and at whether only those resident in Scotland may vote?

Fourthly, the time limit within which the referendum was to be held appears to have been dropped. This seemed important. The Prime Minister said on Sunday that 18 months was to be the time limit, but during the week that appears to have been departed from. Why was that?

Finally, on the consultation itself, it surely has to be done properly rather than quickly. Eight weeks seems to be a somewhat abbreviated period for consultation on such an important issue. Why was that period chosen? As the Minister knows well, Calman provided a good model for consultation. Will Her Majesty's Government follow that model?

[Lord Wallace of Tankerness]

I am very grateful to the noble and learned Lord for his welcome of this consultation. I share many of the views that he expressed, not least that any Government of any Parliament on any mandate must operate within the rule of law. That is one of the fundamentals of our democracy. Clearly, too, simply having a straw poll on the day of someone's choosing would not amount to what we understand properly to be a referendum. That is why the Government take the view that any proper referendum is outwith the competence of the Scottish Parliament. That is why we have set out our view on how we might move forward.

I certainly agree with the noble and learned Lord that it would be in everyone's interests, particularly in Scotland but also in the wider United Kingdom, if these matters could now progress, in his words, “in a mature and less rancorous way”. That is certainly our hope and our intention by publishing this consultation.

The noble and learned Lord asked whether, if the Scottish Government produce conflicting legal advice, it would be referred to the Supreme Court. As he knows, the reference to the Supreme Court would fall on any legislation. The whole purpose of this consultation is to try to avoid that situation so that any legislation passed by the Scottish Parliament is within the competence of the Parliament because provision will have been made for it. That is the way of progressing in a mature and less rancorous way. It is in everyone's interest to avoid any legal uncertainty. In White Papers that were produced during the previous term, the Scottish Government themselves recognised that there was some uncertainty. What we are proposing in the consultation with our preferred Section 30 order is a way of ending that legal uncertainty.

The noble and learned Lord asked whether we had considered the possibility that the Scottish Parliament could veto our Section 30 order. That is obviously the case. A Section 30 order must be passed by both Houses of this Parliament and by the Scottish Parliament before being presented to Her Majesty in Council. Clearly, there would be an opportunity for that not to be passed by the Scottish Parliament. However, the whole point of having the consultation and of engaging not just with the Scottish Government and Scottish Parliament but with wider interests in Scotland is to try to avoid that situation, so that if a Section 30 order is brought forward it is one that can command consent and support.

With regard to the franchise, the noble and learned Lord will note that in the consultation document a question is raised about the franchise. It has been suggested by the First Minister that 16 and 17 year-olds may vote. The view of the Government is that the preferred franchise for the referendum is the one that we currently use to elect the Scottish Parliament. It seems perfectly reasonable, if that is the franchise to elect the Scottish Parliament, that it should be the franchise used for a referendum. Obviously, there are wider issues about whether 16 and 17 year-olds should have the vote. No doubt they will be properly debated in time, but it is not a matter to be debated in the context of this referendum. We asked the question but our view is that the franchise for the Scottish parliamentary elections makes the best franchise for a referendum.

With regard to time, the Government have always said that the referendum should happen sooner rather than later. If the Scottish Government work with us during the consultation process and we go down the route of the Section 30 order, it is possible that these powers can be used to deliver a legal referendum sooner rather than later. But this is a consultation and we are seeking the views of people about how best to deliver a legal, fair and decisive referendum, including when the referendum should take place.

Finally, it is explained in the eight-week consultation document that it is eight weeks because while our preferred option would certainly be to use a Section 30 order there is also the possibility of using primary legislation. The obvious vehicle for primary legislation is the Scotland Bill currently before your Lordships’ House. The House will recognise that there are time constraints on that, but we think that the issues here are very clear. It is not as if the points brought together in the consultation document are ones that nobody has been discussing, although the Scottish Government have perhaps not contributed too much until now. If they are about to produce their own response to this, that is a good outcome already from the consultation document. I think that the issues are clear and one would hope that we could get a wide range of Scottish opinion within the eight weeks and still allow the opportunity, if that should be the case, for the Scotland Bill to be used.

Scotland Bill

Lord Davidson of Glen Clova Excerpts

Tuesday 6th September 2011 Lords Chamber

[Lord Davidson of Glen Clova]

My Lords, we welcome this Bill in principle. Of course, it has been Labour, both in government and in opposition, which has been consistently in favour of devolution. It was the Labour Government who took the initiative in setting up the cross-party Calman commission, on whose work the Bill draws.

We must, however, recognise that the Calman commission produced its report in 2009. Many matters of significance for Scotland have occurred since the report. I will seek to look at a number of issues which have arisen in debate in Scotland that are not as yet found in the Bill. I accept immediately that not every new issue should be reflected in the Bill, but where an issue has emerged of constitutional importance, it should not be lost sight of. One does not anticipate that Scotland Bills will be a frequent occurrence, nor will opportunities arise often to correct constitutional difficulties.

First, perhaps I should say that at a time when economic growth in Scotland is hardly vibrant and unemployment threatens many in Scotland as well as in the rest of the United Kingdom, a focus on purely constitutional issues may seem to many to be at best a skewed priority. True, the Bill contains borrowing powers that could be useful if properly applied at this point in the economic cycle, but the welcome that such powers might receive will be muted if they are not put in place quickly.

I think that I understood the Minister to say that the borrowing powers may come into place in 2012. We certainly have called for them to be advanced to that year, and the Scotland Bill Committee and Scottish Affairs Committee reports both recommend that those powers be brought forward. We would welcome the Government bringing them forward to 2012. It would be useful for people in Scotland to know exactly when in 2012 the Government accept that capital borrowing powers will become available.

One should also observe the attention given to demands for new expanded powers, all claimed to be essential to the regeneration of the Scottish economy. This has led to scant scrutiny of the use of existing powers. The Scottish Government already have a wide portfolio of powers to contribute to economic growth. Their use, their non-use and the ostensible priorities might perhaps be subject to greater assessment and accountability.

I turn to the issue that the noble Lord, Lord Forsyth, has already referred to: a referendum on the question of the separation of Scotland from the United Kingdom, a subject that has engaged substantial debate in Scotland over a number of years. Since this year’s Scottish Parliament election, the issue of a referendum has come very much to the fore. Although there is scant evidence of public demand for such a referendum, the SNP Administration have committed themselves to this at some unspecified point before 2015. While we see no public demand for such a referendum, the issue will not simply vanish, given the SNP’s apparent commitment to it.

The prior constitutional question of law regarding any referendum is by what legal process such a referendum can be held lawful. To put it more acutely, can the Scottish Parliament lawfully put in place its own referendum on separation, set its own timing and questions and possibly ignore the obligations of Scotland to the rest of the United Kingdom? The question of lawfulness is inevitable, as in the Scotland Act 1998 the intention of Parliament was, unsurprisingly, not to put in place a mechanism for decisions on separation but solely to establish devolution in Scotland within the United Kingdom. It would have been remarkable if such a dramatic power to break the union by way of referendum had been included in the 1998 Act. After all, Section 29 of the Act provides that any reserved matter is outside the competence of the Scottish Parliament. Schedule 5(1) states:

“The following aspects of the constitution are reserved matters, that is … the Union of the Kingdoms of Scotland and England”.

Various ingenious attempts thus far to imagine some kind of power to hold a referendum—for example, “It’s just an opinion poll, not a referendum; it’s only advisory”—may at least be unlikely to survive a challenge in court. And no doubt they would be challenged, either by the law officers, the Presiding Officer of the Scottish Parliament or indeed by any concerned citizens or group of citizens. The question for the Government may become whether they should create a proper statutory power in the Bill for, say, a one-off referendum or whether they would countenance a unilateral, potentially unlawful declaration by the Scottish Parliament of its own power to run its own referendum, whenever. That would hardly be the chosen route of any Government committed to the rule of law. It would set a precedent with the most remarkable consequences for the UK. In any event, it would remain vulnerable to third-party challenge with potentially hugely embarrassing results. I encourage the noble and learned Lord the Advocate-General to pursue this issue with his ministerial colleagues, perhaps before he is obliged to consider it as one of his statutory duties in his separate role as law officer. To waver accelerates tension on this issue. I accept that there are many political arguments for the Scottish Parliament to run its own referendum, but the rule of law does not yield to political convenience.

I move on to another constitutional issue: the Supreme Court. This has come to prominence recently because of certain criminal cases in which the role of the Supreme Court has been challenged. Contention has arisen regarding cases involving criminal matters due to some recent cases where an appeal has been made to the Supreme Court on human rights points from the Criminal Court of Appeal in Scotland. In those high-profile cases, the Supreme Court has overturned the Court of Appeal decisions. This has precipitated much debate, not least because of wholly inappropriate criticism of the Supreme Court by the First Minister and the Justice Minister in Scotland.

This Opposition agree that the UK Supreme Court should retain its sole role in determining human rights and European treaty issues. Section 17 of the Bill, however, seems to create a number of obstacles to the speedy testing of compatibility issues. We will want to scrutinise these closely in Committee. One concern is that where Scottish procedures contain an incompatibility, some such obstacle may simply defer and hence magnify the difficult consequences of any finding of incompatibility. The Minister will of course be acquainted with the problems that arose over the slopping-out cases in Scotland and the way in which delay can magnify problems. The Scotland Act 1998 permits a challenge to be made at any stage, thereby potentially avoiding the entire criminal process being run through, where there is an incompatibility discoverable by early challenge.

Another concern is that, in respect of the certification of leave to appeal, Scottish devolution issues will be subject to an obstacle that does not apply to either Welsh or Northern Irish appeals on devolution issues. This seems to be creating an anomaly, and I look forward to hearing the explanation for it.

The apparent fortifying of the position of the Lord Advocate in that regard will also require scrutiny. It is presumably not the intention of the Government to erode the access to justice by persons prosecuted in Scotland. As a member of the legal profession, the Minister will be aware of the considerable disquiet that the Bill has caused in the profession in this area.

The Minister is also one of the many law officers required to look at Scottish arrangements. I move on now to look at the question of Scottish law officers. One of the notable constitutional features of the Scotland Act 1998 was the substantial role given to law officers in Scotland—namely, the Lord Advocate and the Solicitor-General. As part of the Government in Scotland, they are Ministers and bound by collective responsibility. The Lord Advocate—this is the unusual feature—is also the head of the system of criminal prosecution and may in fact lead any prosecution in court, make decisions directly on any part of any prosecution and make the decision on what plea in any prosecution may be accepted. These are wide-ranging responsibilities for a Minister, as I think this Minister would accept, and are increasingly seen as powers that do not belong as part of the responsibility of Ministers.

Having been appointed myself in the past to the position of Solicitor-General in Scotland, I was immediately struck by the tension between the roles of politically appointed Minister and prosecutor. It appeared that there had been no assessment of why Scotland did not have the equivalent of a Director of Public Prosecutions appointed by an open and objective process. When the Minister was Justice Minister in Scotland, he described the role of the Lord Advocate as both prosecutor and Minister as anomalous, and he was right. He would remain right if he were still of that view today.

Over the past decade, law officers have increasingly eschewed involvement in political issues. First the Solicitor-General, then the Lord Advocate, and now both law officers, have been drawn from the Civil Service staff of the prosecution service, a de facto if not de jure Director of Public Prosecutions. Given the awareness of the anomaly in having prosecuting Ministers and the desire on their part to avoid political association and political responsibility, this Scotland Bill is surely an opportunity to remove the anomaly.

The issue also contains within it the risk of yet further human rights challenges to the conduct of prosecution in Scotland, which has been somewhat embattled of late. The Government might consider modernisation of the position. This is not merely a desirable adjustment. It raises profound issues as to the constitutional position of the Scottish prosecution system.

Another feature of the constitutional arrangements under the Scotland Act I wish to look at is the position of the Auditor-General, who examines the economy, efficiency and effectiveness of Scottish Ministers discharging their functions. In the light of the trend to give greater financial powers and responsibilities to Scottish Ministers, the Auditor-General is likely to have, and certainly should have, a role of greater importance in scrutinising ministerial expenditures. A clearer, more transparent view of the Auditor-General’s responsibilities might be helpful. It is hardly good government where the auditor is powerless to act when he is aware of proposed unlawful or wasteful actions, involving expenditure of public money. We suggest that this is an area which calls for clarification of powers and we may look at this more closely in Committee.

I move on to taxation. Part of the statutory purpose of the Bill is to create greater financial responsibility and accountability in Scottish Governments. The Bill sets out a Scottish rate of income tax. One understands and welcomes the purpose, but we will wish to examine in Committee the scheme of taxation proposed. One notes, for example, the provision that envisages the Scottish rate of income tax being set each year by resolution of the Scottish Parliament. In a sense one is familiar with such a process in annual UK Finance Bills. But one is also familiar with the potential for disruption to business and to the economy more generally where substantial shifts in taxation occur.

Some questions arise. What consequences do the Government foresee from this transfer of fiscal power to the Scottish Parliament? What costs to business will result? What greater administrative burden will the transfer impose on business in Scotland? Is the tax base in Scotland sufficiently resilient to absorb the use of income tax for the budgetary purpose envisaged? What problems do the Government foresee in respect of the residence definitions, and the checking of days spent in Scotland by those who may work or reside in more than one part of the United Kingdom? We consider scrutiny of these issues in Committee to be necessary.

In conclusion, I repeat the welcome that we gave to the principles guiding the Bill. However, it should be clear that we consider that this Bill should not miss out the areas where the experience of more than 10 years of devolution shows a need for constitutional clarification, at least. We look forward to examining the Bill and its various amendments in Committee.

Scottish Parliament (Elections etc.) Order 2010

Lord Davidson of Glen Clova Excerpts

Thursday 9th December 2010 Lords Chamber

In conclusion, I welcome the decision to transfer the conduct of Scottish parliamentary elections, which my noble friend referred to, in the Scotland Bill in conjunction and in accordance with the recommendations of the Calman commission on further devolution. It seems to me that, in these limited debates on statutory instruments, we can give only inadequate scrutiny of something so profoundly important as the conduct of parliamentary or local elections in Scotland. It is a deficiency of our scrutiny which I think will be rectified by what is proposed.

[Lord Davidson of Glen Clova]

My Lords, despite the blistering attack by the noble Lord, Lord Maclennan of Rogart, on the order and on the Explanatory Memorandum, we welcome the fact that the Government have continued the work of the previous Government in implementing the recommendations of the Gould report and the inquiry by the Scottish Affairs Committee. This is particularly so after the unfortunate experience in the 2007 Scottish elections to which the Minister has alluded.

There are, however, two aspects on which I wish to hear the Minister’s answers: first, the decision to combine the referendum with the Scottish parliamentary elections on the same day; and, secondly, the delay in bringing forward this electoral legislation. As he is aware, both these aspects do not gain the support of the recommendations of the Gould report.

The combination of the referendum and the Scottish parliamentary elections at least runs the risk of creating voter confusion similar to that identified by Gould in the 2007 election arising out of the combination of local government and Scottish parliamentary elections. Gould reports such a combination as a disservice to the electorate. I shall be interested to hear the Minister’s answer as to why the UK referendum on alternative voting on the same day does not detract, to some degree, from the Scottish parliamentary issues and candidates, and, indeed, vice versa.

The other area of dissonance with the Gould report on which I also wish to hear the Minister’s answer is in respect of the delay in bringing the order forward. I share the concern of my noble friend Lord Browne of Ladyton on this point. I, of course, understand the crowding-in effect that can afflict government business; however, as the Government have made much of the aspiration to move to more efficient governance, I would observe that they have not met the Gould recommendation that electoral legislation should not be,

“applied to any election held within six months of the new provision coming into force”.

Given the unfortunate aspects of the 2007 Scottish parliamentary elections, it might have been hoped that the Government would have adhered to what Gould identified as,

“a practice found in the electoral laws in other countries”.

Is there a reason for this approach? As there was an opportunity to take a major initiative to rationalise Scottish parliamentary election legislation, I would be interested to hear why this recommendation has not been followed.

On the drafting infelicities to which my noble friend Lord Browne of Ladyton has already alluded, I took the Minister’s answer to be an acceptance that there is a systemic problem in the drafting. As my noble friend put it, this seems to be a symptom of a real problem in the process. Again I will be interested to hear the Minister’s answer to this analysis. I can well understand my noble friend’s disappointment in discovering so many infelicities as it was he who approved the task of consolidation of electoral legislation, the whole point of which is to bring everything together in a more understandable formation of legislation.

I also share my noble friend’s astonishment at the failure to consult the Law Society of Scotland. I also draw the Minister’s attention—he may be aware of this—to the fact that the Faculty of Advocates in Scotland can also provide useful views in relation to constitutional matters. I, like he, am a member of that body.

--- Later in debate ---

[Lord Maclennan of Rogart]

I wonder if the noble and learned Lord would accept that a short guide could, in its appendix, refer to the relevant provisions of law, but that the guide itself need not be an expression of the law; it is simply a guide. A lot of lay people who are not lawyers have to understand the basic rules. These are obscure and cannot be easily abstracted from this document.

[Lord Davidson of Glen Clova]

That is certainly an ambition that I would applaud. It is the execution with which I perhaps have a degree of concern. When one has seen what has been done with the Explanatory Memorandum, even a short guide for the increase of understanding by ordinary lay people would help. It is a matter on which we will never know the answer, I suspect.

In conclusion, despite the points that I have made in relation to the matter so far, I welcome the useful changes that have been produced by the order, which should enable a more rational, modernised election process in Scotland.

[Lord Wallace of Tankerness]

My Lords, I thank all noble Lords who have participated in this debate, notwithstanding some of their criticisms about the technical details and some of the content of the order. Nevertheless, they have welcomed the generality of the order and indicated their support for it. I shall try to deal with a number of the important, serious and constructive points that have been made, which merit a response. First, I will deal with perhaps the politically more controversial part—the elections being held on the same day as the proposed date of the referendum on the voting system to be used for the other place. The noble Lord, Lord Browne of Ladyton, indicated that Mr Ron Gould, in his submission to a Select Committee in the other place, had made comments on this; and I accept that he expressed a preference for separate dates. However, it is important to put on the record that he said:

“The marking of yes or no on a referendum ballot is much easier to understand and carry out than the requirements of marking an STV ballot”,

which, of course, was the other ballot paper that voters had to fill in for the election in 2007. He went on to say that there were benefits to combination with reduced and higher turnout. He specifically said,

“I do not believe that the same factors which led to voter confusion and the large number of rejected ballots at the last Scottish Parliamentary and Municipal elections would arise if both the Parliamentary Election and the Referendum were held on the same date”.

--- Later in debate ---

[Lord Wallace of Tankerness]

I do not think that I walked into any trap; I acknowledged that Mr Gould had said that he would prefer a separate date.

I ask the noble Lord to reflect that the first election to the Scottish Parliament in 1999 was held just a matter of weeks after the NATO engagement in Kosovo. That issue dominated much of the election period. Indeed, he will no doubt recall the leader of the Scottish National Party starting the election campaign by saying that it was error of some proportion—I think he said that it was an unpardonable folly. That was a huge issue that dominated the news, but no one suggested at the time that it detracted from the proper discussion and debate about the issues that the new Scottish Parliament was going to debate.

The noble Lord will also recall that in 2003, some six weeks before the election, under the leadership of his right honourable friend Mr Tony Blair, this country invaded Iraq. The noble Lord supported it; I did not. Nevertheless, it was an issue of considerable importance—neither of us would disagree with that. The whole invasion campaign dominated the period of the Scottish election campaign. I do not think that anyone suggested that debates on the issues that the Scottish Parliament was responsible for, be that health, education, transport or local government, were in any way impeded and that politicians did not engage in those debates as they went to the hustings in the May 2003 election.

I suspect that, by comparison, however important we may think a referendum on the alternative vote system for the House of Commons is, in my view that does not compare in gravity with the invasion of Iraq. I have no doubt that when it comes to the lead-up to the election, the people of Scotland will be able to distinguish clearly between the issues involved in the election of Members to the Scottish Parliament and the issue that they will be asked to address of how the other place should be elected in future.

The noble Lord seemed to suggest in his remarks that it was a constitutional outrage to link two polling opportunities together. He will no doubt recall, or maybe he does not, that in May 1998 the Government, of which I suspect he was not a member then but was subsequently a member, actually combined the referendum on the London mayor with the London local elections. I look back and consider that the general election of 2001 was linked to the local elections; indeed, they were both moved—at least, the local elections were moved and the general election piggybacked them—to June 2001 because of foot and mouth disease.

I think that I am right in saying that in 2009 the Government of which the noble Lord had recently ceased to be a member moved the local elections to coincide with the European election, and that the right honourable gentleman Gordon Brown was quite happy this year to combine the general election with the English elections that were already taking place. The combination of elections is not exactly unprecedented; there has been quite a lot of it in recent times.

[Lord Davidson of Glen Clova]

While it is always fascinating to have a lengthy analysis of many things that have nothing whatever to do with the Scottish parliamentary elections, I remind the Minister, if he is going to continue with this theme for many more minutes, that the Gould report dealt with the point that if one has two particular votes being made at the same time, the concern is that there would be a dominance of one campaign by the other. He considered that it was wholly inappropriate to have the Scottish parliamentary contest potentially dominated by another election or vice versa, as I indicated earlier. If the Minister might answer that particular point as opposed to proceeding with his historical analysis, we might gain some light on the matter.

[Lord Wallace of Tankerness]

The only reason I proceeded with an historical analysis was that the noble and learned Lord’s noble friend said that it was “almost unprecedented”. I was identifying a number of occasions on which it had happened, under the auspices of the Government of which both noble Lords were, at some time, members.

Terrorist Asset-Freezing etc. Bill [HL]

Lord Davidson of Glen Clova Excerpts

Wednesday 6th October 2010 Lords Chamber

[Lord Davidson of Glen Clova]

My Lords, the last Government passed the provisional Bill earlier this year to validate existing asset-freezing orders and to avoid gaps in the terrorist asset-freezing regime. At the same time, we sent a draft Bill for public consultation to ensure that we had a viable long-term framework for terrorist asset freezing. Those were the right decisions to take at the time and I thank the Treasury for its advice on these matters. What it means for us today is that we now have the benefit of public submissions on the draft Bill and the report from our Constitution Committee. Submissions on the draft Bill voiced a concern that the balance was not right between public security and individual civil liberties. Added to that is the report from the Joint Committee on Human Rights, which noted the necessity to keep assessing the appropriateness of terrorist legislation to ensure that the measures imposed remain fair and proportionate. We have taken these views on board.

The interim designation proposal from the Government is inevitably a compromise position to accommodate some of the concerns raised by the Supreme Court in the Ahmed case, in public submissions made on the draft Bill and by the Constitution Committee in the House of Lords. We have been considering the viability of a similar regime ourselves. In considering this solution further, we have a few questions about the Government’s proposed regime.

One issue that might benefit from clarification—this echoes the remarks of the noble Baroness, Lady Falkner—is how the Government came to the 30-day timeframe. I assume that there was nothing very principled about it. Do the relevant agencies consider that they will be able to meet the higher test within such a period? Do they consider that that will put a particular imposition on the limited resources available to them in this particularly difficult area?

As I understand the Minister’s position, the consequence of the new approach is that the order will drop, although it is reasonably suspected that an individual is involved in terrorist activity. I appreciate that there is more than a semantic difference between “reasonable suspicion” and “reasonable belief” but, as the noble and learned Lord, Lord Lloyd of Berwick, said, the difference between the two tests can be quite thin. Because this may be an area that will become contentious in court, it would be helpful if some indication might be given as to how the Minister perceives the difference between the two tests. As the noble and learned Lord, Lord Lloyd of Berwick, also said, it is paramount to suspend terrorists’ funding when one may.

There is a concern about the extent to which a string of interim designations might lead to pressure on sparse resources. Have the Government considered the possibility of a longer timeframe with a definitive cut-off point as a way in which to provide certainty and capacity for the long-term credibility of the asset-freezing regime? There is in New Zealand a possibility of a one-year interim designation based on the lower burden of proof. That cannot be renewed. After that period, the relevant authority, in that case the Prime Minister, must decide whether to grant a final designation or to allow the designation to lapse. That acknowledges the important balance required between civil rights and security. It would be interesting to know whether the Government have any information on how that regime has operated in New Zealand and it would be useful if such information as the Government possess might be made available.

There is interest in the Government’s assessment of costs in introducing this regime into the asset-freezing framework. I appreciate that this might be asking for too much, but are there any indications as to what additional costs might be associated with having an interim and final designation scheme?

Finally, I share the view expressed from all quarters of the Committee, including by the noble Baronesses, Lady Hamwee and Lady Falkner, and the noble Lords, Lord Myners and Lord Lester, that further debate on some of these amendments might be useful. I echo the noble Baroness, Lady Noakes, in expressing disappointment about the absence of a review. Again, it would be helpful to have a timeframe that the Minister is confident in telling the Committee about when that review might come.

I draw attention to the point that the noble Lord, Lord Lester of Herne Hill, identified, with his usual acuity, on the recent decision of the European Court of Justice. Plainly this must raise questions about how that Court views the potential for abuse in the system as it is currently proposed. It would be useful to hear what consideration the Government have given to the decision of the Court. I appreciate that the decision is very recent and would not expect any developed appreciation of the judgment.

[Lord Sassoon]

My Lords, I am grateful for the important contributions that we have had to this discussion and for the focused points. I appreciate the remarks from around the Committee in response to the amendments that we have brought forward. On one or two of the procedural points, I apologise if noble Lords believe that our amendments came forward a bit late in the day but, as your Lordships will appreciate, they are fundamental amendments to the Bill and, with the Recess and the summer holidays, it took some time, both within the Treasury and with my colleagues in Government, to ensure that we got them absolutely right. We took the time necessary to do that, but I apologise if it has been a bit of a scramble in the past couple of days.

On the question that a number of noble Lords have raised about the process of amendments to amendments, my understanding, although I am the newest of new boys here, is that amendments to amendments are possible but the reversal of amendments on Report is not. Whatever the construction is, though, I am sure that we will be bound by whatever the conventions of the House are. However, I take the point that there are potentially a number of bits of tidying up. We will come to the individual items, but there are certainly one or two things that I shall take away and reflect on. I take that procedural point.

On the question of the publication of the Home Office review, I can only repeat what I said in my opening remarks—I have no specific date. However, I note the remarks that have been made today, and I will take them away and relay them to my right honourable friend the Home Secretary.

I turn to some of the specific points that have been raised. A number of noble Lords, starting with the noble and learned Lord, Lord Lloyd of Berwick, have made the suggestion that it should be for a judge to make the order rather than a Treasury Minister, with the courts then reviewing the order if it is appealed. I cannot do more than refer to the powerful case succinctly put by my noble friend Lord Carlile of Berriew, who said what I would probably have said at greater length: we believe, given the nature of this regime and the nature of the process that requires Ministers to take account of operational information, that it is appropriate for Ministers to make the initial order, but making that order has to be done on the considerably strengthened tests that we are now proposing and there has to be a concern that the public would be put at risk if the order were not made.

--- Later in debate ---

[Lord Davidson of Glen Clova]

My Lords, as noted earlier, the issue of civil liberties was raised in respect of the terrorist asset-freezing regime in the Bill. Some of the submissions on the draft Bill and in the report of the Constitution Committee suggested that more judicial oversight of decisions be made under the new Act. The contributions in the earlier debate reiterated that point. These amendments are intended to provide a better check and balance on decisions taken by the Executive behind the closed doors of the Treasury. This is to be welcomed.

As with the burden of proof issue discussed in earlier amendments, we support the introduction of more judicial oversight to protect civil liberties. It is correct that the previous Government considered it appropriate for the executive branch of government to make initial decisions in this area and we do not resile from that point. We welcome the Government’s amendment to make this regime more credible by having a judicial check and balance on that power.

I echo the view of the Joint Committee on Human Rights that we should constantly review terrorism legislation to make sure that we have the balance right. The Minister noted the interest on this side in the Home Office’s view on this area and I repeat that it would be helpful to have that to inform future debate.

Perhaps I may raise one or two probing issues in relation to the terrain of appeal. I respectfully agree with the noble Baroness, Lady Hamwee, that this area does not seem wholly clear. What seems to be envisaged is a form of appeal that is, to a degree, sui generis; it is not simply going off to the Court of Appeal or the Inner House. The judicial review also appears to operate in some way that may be parallel. It would be helpful if the Minister could indicate what is envisaged by this nature of appeal.

I would be particularly interested to hear whether it is envisaged that there should be some kind of fact finding. I raise this question because, in endeavouring to find out what was proposed in relation to an amendment that I shall bring forward later in relation to compensation, the answer that I received from Treasury officials was that compensation might be dealt with by the Appeal Court. As the Minister will immediately recognise, that introduces the question of fact finding that might come before any such, putting it neutrally, adjudicator. We are left with a certain lack of clarity as to what the Appeal Court is endeavouring to do and what its remit will be.

The point was well made by the noble Lord, Lord Pannick, that in this area timing will be critical. If the notion of a remedy to the Appeal Court is to have substance, it will be essential on issues such as interim designation to have the potential for speedy trial. Because this area is a relatively late introduction by way of amendment, it would be helpful to have guidance on what the Government envisage.

Perhaps I may make one final point in relation to the amendment tabled by the noble Baroness, Lady Hamwee. It is a gentle point; I hope that I am not to be accused of Caledonian prickliness. It relates not only to this amendment but to a number of amendments.

[Baroness Hamwee]

I have got the point before the noble and learned Lord makes it.

[Lord Davidson of Glen Clova]

Then I will not make it.

Terrorist Asset-Freezing etc. Bill [HL]

Lord Davidson of Glen Clova Excerpts

Wednesday 6th October 2010 Lords Chamber

Moved by

[Lord Davidson of Glen Clova]

46: After Clause 12, insert the following new Clause—
“Compensation
(1) The Secretary of State shall, by order, provide for the compensation of persons who have suffered loss as a result of an incorrect designation.
(2) An order under subsection (1) shall include provisions about—
(a) who may make a claim for an award;(b) to whom a claim for an award is to be made (which may be provision that it is to be made to the High Court or, in Scotland, the Court of Session);(c) the procedure for making and deciding a claim;(d) the circumstances under which compensation must be awarded (which may include provision that the circumstances involve negligence or other fault);(e) the amount that is to be awarded;(f) who is to pay any compensation awarded (which may include provision that it is to be paid or reimbursed by the Treasury);(g) how compensation is to be paid (which may include provision for payment to a person other than the claimant).”

--- Later in debate ---

[Lord Davidson of Glen Clova]

My Lords, the purpose of our amendments is to raise the broad issue of compensation and indemnity for consideration by the Committee. The suggested amendments have, as their provenance, the Australian terrorist asset-freezing regime. There are two principal parts to our proposed scheme: first, to indemnify persons from civil litigation for loss suffered as a result of having assets wrongly frozen when the person holding the asset has acted in good faith and without negligence, which includes protection from the Crown, needless to say; and, secondly, to compensate those persons who have suffered loss as a result of having assets wrongly frozen, when the person holding the asset has acted in good faith and without negligence.

The draft of the proposed amendment differs from the Antipodean legislation but follows the same approach as adopted in Australia. The position in Amendment 52 on indemnity is self-explanatory—namely, to exclude liability when the person has acted in good faith and without negligence in compliance or purported compliance with this part. It then sets out, perhaps a little inelegantly, how the various persons and institutions might be identified by reference to designation.

The second, related, aspect is compensation, set out in Amendment 46, which suggests a power for the Secretary of State to make orders providing for compensation when people have suffered loss as a result of an incorrect designation. The order may include various provisions, as is set out in the proposed amendment, on who can claim for an award, with which court the claim may be made, and so on. The phrase adopted,

“suffered loss as a result of an incorrect designation”,

would include persons incorrectly covered by a designation, such as someone with a similar name or the same name as the designated person—and US experience teaches us that that has become an increasing problem with terrorist-related issues. It would also include a designated person who has had their assets frozen incorrectly—for example, inconsistently with an applicable licence.

As I indicated earlier, we understand that the Government consider that there is sufficient compensation by way of a mechanism through appeal to the court. When I queried the Minister about this, I am not sure that I detected a complete response to our understanding. If my understanding is correct, one is in the position that the Appeal Court may make these orders, presumably by way of compensation. It would be helpful if the Minister could give some indication as to how it might be envisaged that such a process would work. It may be that it is seen as part of the judicial review process. Again, it would be helpful if it could be indicated how that might work.

The Government have also not included any particular compensation scheme in this Bill, but in so doing have distinguished the Bill from the Anti-terrorism, Crime and Security Act 2001, which provides a compensation scheme to be included with a freezing order. The proposal that is before the Committee in this amendment seeks to redress the dissonance between that Act and this Bill and to provide a transparent compensation scheme together with a proposed scheme for indemnity. That would avoid what might be called collateral damage from the operation of the asset-freezing regime proposed in the Bill. I beg to move.

[Baroness Noakes]

My Lords, I am sure that the Minister has “resist” written in large letters all over his speaking notes, but before he rushes to do so I shall add one example from the real world, which came to my party when we were preparing for the emergency Bill earlier this year. Our adviser at that stage, who was an eminent QC, gave us an example in relation to analogous legislation in which a company had been included on a blocked list because its shares had previously been held by a suspected person. Some months before his inclusion on this list, the person had sold his shares in the company on an arm’s-length basis and for value, but the company was nevertheless incorrectly included on a blocked list. It took a fair amount of time for the designation to be challenged and for the various other licences to be obtained, but in that intervening period the company suffered a considerable period of loss. My point in raising this is merely to say that there are real-world examples when loss can occur. We are not dealing with theoretical situations of safeguards to be included in the Bill. I hope that the Minister can give some reassurance to the Committee that remedies are available when that sort of situation arises.

--- Later in debate ---

[Lord Wallace of Tankerness]

I am grateful to the noble Lord for that intervention. I sought to draw a distinction, which I think my noble friend Lady Noakes made, under Amendment 57, where the question is of the designated person himself or herself. My noble friend made a different point, the position on which I indicated I would write to her and clarify.

My understanding is that it would be possible for the court to make, as he says, such orders as it considers appropriate. That is not qualified in any way, although I take the noble Lord’s point. If indeed it requires further specification then I will be willing to consider that. If it is felt that the nature of what is in the Bill, although it seems very wide, is insufficiently wide to cover the reassurance that I have given, I will undertake to look further at that.

[Lord Davidson of Glen Clova]

I am invited to withdraw, and the Minister has always been remarkably persuasive when I appeared against him in court. There are a couple of points though. First, one cannot write off the Antipodes with a wave of the hand in the way that the Minister sought to do; they face the same problems and have produced imaginative responses.

With regard to the question of imposing a duty in respect of compensation, true it is that that differs from the 2001 Act; but it does not avoid the dissonance that the 2001 Act actually refers to a possibility—that is, a discretion in relation to compensation. I invite the Minister at least to consider whether there might be a similar discretion, if not a duty, in the Bill.

In relation to the safeguards already in place, one may obtain damages whether one is the designated person or a non-designated person. I am still slightly confused as to where in the Bill one is to find this. If it is to the Appeal Court that one must go, then not only is there the issue that the noble Baroness, Lady Noakes, raised—we will find out in due course what the answer to that is—but there is also the question of how the Appeal Court is going to deal with damages. As the Minister well knows, simply because one asserts a damage, it does not follow that it will be accepted by the authorities. Is the Appeal Court to have a fact-finding role in relation to damages?

In relation to judicial review, again, for a party who is not the designated person to raise their own judicial review and proceed to damages is perhaps not necessarily—as a matter of law, as the noble Lord, Lord Pannick, suggests—the most obvious way of acquiring damages. Again, it would be helpful in due course to have some clarification on that. I welcome the Minister’s embrace of the Human Rights Act, for which I know he has a strong regard, although it has not always been demonstrated by other members of the coalition. The way in which this is to proceed leaves a certain gap as to where the Human Rights Act will go in these issues. I will accede to the Minister’s suggestion that I withdraw the amendment, but I also note that we may well return to this on Report.

Amendment 46 withdrawn.

--- Later in debate ---

[Lord Davidson of Glen Clova]

My Lords, I shall speak to Amendments 78 and 79, which stand in my name and that of my noble friend Lord Davies of Oldham. Amendment 78 is self-explanatory. It seeks consolidation of the legislation in relation to terrorist asset-freezing regimes throughout the United Kingdom. I am conscious that time after time it is suggested that all manner of laws should be consolidated, but that is not always possible due to parliamentary time and so on. In this case, I bring to the Minister’s attention—although I am sure he already knows—that in Ahmed the Supreme Court has already suggested that consolidation may be useful in this area. That view was repeated by the Constitution Committee. I immediately accept that consolidation is outside the scope of the Bill and, as the noble and learned Lord, Lord Wallace, has indicated, it might produce delay that could not be countenanced, given the need for the Bill to be in place by the end of the year. Therefore, only this limited amendment is proposed. It provides that the independent reviewer should include recommendations about whether there should be consolidation of the legislation.

Amendment 79 is also self-explanatory. It requires the independent reviewer to publish expenses and allowances. This is our usual requirement of transparency in relation to this innovation of a new reviewer.

[Baroness Falkner of Margravine]

The report by the Constitution Committee, of which the noble Lord, Lord Pannick, and I are members, recommended that there should be consolidation of the legislation. I think there are two other Acts that relate to terrorist-asset freezing regimes. Will the Minister tell us his views on that consolidation?