Banking: Liability.

Lord Davies of Oldham Excerpts

Tuesday 7th December 2010 Lords Chamber

[Lord Sassoon]

My Lords, I am happy to confirm that in everything the Government do, we put a major store on openness and transparency. Indeed, we will bear that in mind in our approach to financial regulation in future.

[Lord Davies of Oldham]

My Lords, does the Minister not recognise the great anxiety about this situation? He says that “we”—I presume that he therefore speaks on behalf of the Government—have no knowledge of the report either. This is a totally unsatisfactory situation when lessons need to be learnt about such an important development. Will he not therefore look at the extent to which Her Majesty’s Government can emphasise to the FSA the desirability of making more public the position it has taken up?

[Lord Sassoon]

My Lords, that is what we are doing, but we are acting within the constraints of the Financial Services and Markets Act, which was brought in by the previous Government in 2000.

Terrorist Asset-Freezing etc. Bill [HL]

Lord Davies of Oldham Excerpts

Monday 1st November 2010 Lords Chamber

[Baroness Hamwee]

My Lords, I cannot bring the same academic knowledge to this debate as the noble and learned Lord and the noble Lord, Lord Pannick, but I start with the question of what this Bill aims to achieve and what it is directed at. As I understand it, it deals with assets that are in the UK. For me, other questions flow from that. I agree with the noble Lord, Lord Pannick, that if there is a query over the scope of the Bill, it should be clarified. One would hope not to have an argument such as this repeated either in the other place or, indeed, in court. However, having been involved with this Bill and its predecessor, I do not have the anxieties that have been expressed this afternoon.

[Lord Davies of Oldham]

My Lords, on behalf of the Opposition, I too would not dream of seeking to put myself in the same category of argument as the noble and learned Lord and the noble Lord who have spoken on these issues. The Minister has an argument here that he will need to respond to effectively. We in the Opposition thought that most of these issues were covered effectively on Report by the Minister. Like the noble Baroness, Lady Hamwee, who has expressed her reservations about other aspects of this Bill in the past, we see no argument for this amendment at present. Therefore, if we were to move to a Division, the Opposition would support the Government if, as I anticipate, they present an accurate and effective case for the rebuttal of this amendment.

[Lord Wallace of Tankerness]

My Lords, I am grateful to the noble and learned Lord, Lord Lloyd of Berwick, for introducing this debate. I am also grateful to other noble Lords for their contributions. I am particularly grateful to the noble Lord, Lord Davies, and my noble friend Lady Hamwee for indicating that, subject to what I may say, they are generally satisfied with the position which the Government have adopted.

This amendment goes back to the debate we had on Report about the scope of Clause 2 and whether it should allow the Treasury to designate non-UK persons who are outside the United Kingdom. We are grateful to the noble and learned Lord for having written to my noble friend Lord Sassoon, following our debate on Report, to explain his concerns with the clause as drafted, and for having taken the opportunity to discuss the matter in some detail with officials before he tabled his amendment. I readily recognise that this amendment stems from the noble and learned Lord’s very strong belief, which he clearly expressed in moving his amendment, that it is the right and responsibility of each country to make laws that affect their nationals and those within their jurisdiction. Generally, we would not dissent from this principle but, if the House will permit me, I will explain why we cannot accept the noble and learned Lord’s amendment.

The noble and learned Lord referred to United Nations Security Council Resolution 1373, which requires that states shall,

“Prohibit their nationals or any persons … within their territories from making any funds, financial assets or economic resources or financial or other related services available, directly or indirectly, for the benefit of persons who commit or attempt to commit or facilitate or participate in the commission of terrorist acts”.

I think it is clear that a key aim of Resolution 1373 is to prevent acts of terrorism anywhere in the world. To that end, the definition of terrorism in this Bill is borrowed from the Terrorism Act 2000 and is used in other legislation. The definition makes it clear that terrorist activity anywhere in the world against persons or Governments falls within the scope of the legislation.

It is also clear that Resolution 1373 puts an obligation to prevent terrorist finance not only on the state where particular terrorists and terrorist groups reside but on the states from which the funding of those terrorists may originate. If, for example, a foreign terrorist holds assets within the United Kingdom or relies on funding coming from the United Kingdom, it is not only right but essential that the United Kingdom should be able to freeze those assets and prevent funds being transferred for terrorist purposes. That is what the language of United Nations Security Council Resolution 1373, which I have just quoted, clearly requires.

Relying purely on the country where the terrorist resides to take action has two fundamental drawbacks. First, that country cannot control funds or other assets that may be available for use overseas by the terrorist. This is why the Security Council resolution is worded as it is. Secondly, we know, as was acknowledged in our short debate, that terrorists are often based in countries where the authorities cannot or will not take action: for example, in failed states or in states where the authorities turn a blind eye to terrorism.

Clause 2 therefore provides the Treasury with a power to identify those whom we consider to be terrorists, based on activities that could take place anywhere in the world. The effect of the designation is twofold. First, any funds and economic resources within the United Kingdom of such persons are required to be frozen. It will be a criminal offence for anyone in the United Kingdom to deal with such assets without licence from the Treasury.

Secondly, persons in the United Kingdom will be prevented from providing any funds or economic resources to designated persons. I shall try to make it clear; the fact that some persons designated by the Treasury are ordinarily not in the United Kingdom does not give extra-territorial effect to the provisions. The effect of listing such a person is to freeze only their United Kingdom assets and prevent persons within the United Kingdom or United Kingdom citizens abroad assisting them. It has no further effect.

The noble and learned Lord, Lord Lloyd, asked what would happen if we were to designate a terrorist who was in France. He suggested that it might lead to a breakdown of international comity. That we are taking these measures in pursuance of a United Nations Security Council resolution indicates where the balance of international comity may lie; it is in United Nations member states taking the resolution and implementing it. We have not so far designated a French national. However, if we were to do so, I would certainly expect close co-operation between United Kingdom and French authorities in such a matter. The French might indicate to the United Kingdom that a French national was a terrorist of concern to them, whose assets they wanted to freeze. Working with French counterparts, the United Kingdom’s law enforcement agencies would identify whether that suspected terrorist held assets in the United Kingdom that the French Government then wished to be frozen. The French would provide United Kingdom authorities with the relevant evidence to support a UK designation, showing that there was at least a reasonable suspicion that person X was involved in terrorism and that a UK asset freeze was necessary for protecting the public from the risk of terrorism.

Finally, a Treasury Minister will consider the case and, if the legal test that is set out in this Bill is met, will designate person X, with the Treasury taking the necessary steps to inform the financial sector and to freeze person X’s assets within the United Kingdom. We accept that other countries may use domestic asset-freezing powers to designate United Kingdom nationals, but again we would expect this to be done in co-operation with United Kingdom authorities.

The power in Clause 2 relates to designated persons, including non-UK nationals; it is not a radical departure. Sanctions legislation is by its very nature often targeted at persons outwith the United Kingdom, but the prohibitions bite only on those in the United Kingdom or when United Kingdom nationals are elsewhere. An example is the prescription regime under the Terrorism Act 2000 and this legislation. There is a list of prescribed groups, almost all of which operate outside the United Kingdom, but the effect of proscription is to prohibit persons in the United Kingdom from membership of such groups or from providing material support to such groups. As with our Bill and sanctions legislation generally, the target is outwith the United Kingdom but the prohibitions apply solely in relation to persons in the United Kingdom or UK citizens operating abroad. That accords with the fundamental jurisdictional principle that the country should normally legislate to criminalise only acts committed within its territory or by its citizens abroad. Here the acts that are being criminalised are the provision of finance for the purposes of terrorism.

I understand the noble and learned Lord to be concerned about interfering with the sovereignty of other states. I hope that he can see from an indication of how we might act in the event of getting intelligence or representations from France that this measure would not offend another state but would promote co-operation. At the risk of repeating myself, the effect of a designation is to freeze only those assets of a designated foreign national that are within the United Kingdom, and we believe that that is the sensible way in which to proceed.

Clause 1(b) refers to persons listed in Council Regulation 2580/2001. This regulation is the means by which the European Union implements Resolution 1373; it does so by requiring member states to identify persons against whom the state has taken action, for example by way of a domestic asset freeze. Persons put forward and included on the list are then subject to financial sanctions throughout the EU. The reference to “persons” here cannot be confined to those within the UK and the same term cannot have different meanings in the same clause. The EU regime emphasises, I think, the essential territoriality of an individual member state’s actions, and the need for each member state to take action against assets in their country and to prevent those in the country from providing material support to terrorists.

The noble and learned Lord referred to Clause 33, which provides for cases in which UK nationals and UK incorporated bodies commit an offence outside the UK. This is not an unusual extension of the application of a statute, and I do not think—nor did he suggest—that it is in any way controversial. The purpose is straightforward—to prohibit UK nationals and companies from committing acts abroad that would be offences under the Bill if committed here.

The noble Lord, Lord Pannick, asked whether we should be able to designate overseas persons only if they hold assets in the United Kingdom. I have answered that. The asset-freezing regime not only freezes assets but prevents persons in the United Kingdom making payments to a designated person. That is why we need to be able to designate overseas persons, even if they do not hold funds in the UK, so that we can prevent people in the United Kingdom or UK persons overseas providing designated persons with funds.

In summary, we believe that Clause 2 does not limit the Treasury to designating only persons who are in the UK, and nor should it. While we have listened carefully to the noble Lord’s arguments today, on Report and in the exchanges that he has had with my noble friend, we are satisfied that the wording of Clause 2 as it stands is sufficiently clear in this regard. It does not make the provision extra-territorial. Clause 2 merely identifies those persons involved in terrorism whose assets persons in the UK cannot deal with and whom persons in the UK cannot assist by providing funds or economic resources.

For this reason, the Government cannot support the amendment, and I urge the noble and learned Lord to withdraw it.

Taxation: Deficit Reduction

Lord Davies of Oldham Excerpts

Thursday 28th October 2010 Lords Chamber

[Lord Sassoon]

My Lords, I will try to be very careful with my wording and simply agree absolutely with what my noble friend has said.

[Lord Davies of Oldham]

My Lords, the Minister is responsible for the efficiency of his department and he will know the calamitous position that Her Majesty's Revenue and Customs was in earlier this year with regard to the settlement of our fellow citizens’ taxation matters. How does the Government's proposed determination to tackle tax evasion and avoidance square with a determination to cut 13,000 posts in HMRC over the next few years?

[Lord Sassoon]

My Lords, I have already explained to the House that we are targeting considerable extra resources where it matters in order to get in extra revenue. That is critical. The noble Lord talks about the calamitous position, but where did the calamitous position arise from? This is the result of an exercise to bring forward and modernise the reconciliation systems in our income tax system, which has been sorely needed for quite a few years.

Terrorist Asset-Freezing etc. Bill [HL]

Lord Davies of Oldham Excerpts

Monday 25th October 2010 Lords Chamber

[Noble Lords]

Order!

[Lord Davies of Oldham]

My Lords, at the Report stage of a Bill, the Minister is not here to be cross-examined in this way. My noble friend may make one contribution—he has made several—so he certainly ought not to make any more. We are dealing with the Report stage of the Bill and the Minister is replying to the debate.

[Lord Stoddart of Swindon]

My Lords, on this important amendment, we have heard from the Minister that because he is a layman, as I am, he is not able to answer the questions raised by the noble and learned Lord, Lord Lloyd, in a manner that satisfies those of us who are laymen and thus enables us to vote intelligently if a vote is called.

--- Later in debate ---

[Lord Lester of Herne Hill]

I agree with the noble Lord, Lord Pannick, and with my noble friend. I am speaking partly as a member of the Joint Committee on Human Rights, whose report was published on Friday last. We took the most unusual step of publishing our preliminary report before we had seen the Government’s response. I am therefore sure that once the committee, which meets tomorrow, has had a chance to look at this debate, it will be too late to influence what happens in this House, but I hope it may be looked at in the other place.

I shall not waste the time of the House by citing what is in our report as it can be read by anyone who is interested. However, one point at the end of it bears on all these amendments. At paragraph 1.47, we ask the Government to explain why the opportunity is not being taken in the Bill to provide a comprehensive and accessible legal regime for terrorist asset freezing, and therefore to provide Parliament with the opportunity to scrutinise those powers for human rights compatibility, the lack of which so troubled the Supreme Court. That is a general and important point, and it may have to be pursued if not here then in the other place.

[Lord Davies of Oldham]

Amendment 17 stands in my name and that of my noble friend Lord Bach on behalf of the Official Opposition. We table it today in order to debate what the Government propose to do about people whom they have reasonable grounds to suspect of being terrorists but have not gained further evidence to impose a further interim or final designation. If the Bill is passed in its current form, an interim designation will lapse after 30 days and the person will again have the opportunity to access their assets at potential risk to the public.

The Minister will appreciate the fact that he has had support from the Opposition on crucial aspects of this Bill both in Committee and again today. However, he ought not to countenance the view that we have no anxieties about the legislation, or any actions of the Government that may be related to the legislation if and when it comes into effect. We all recognise the seriousness of the debates we have had on this important legislation. On the one hand, we have clearly heard about the rights of the individual and their dependants, who may be subject to an asset-freezing law. We have heard so eloquently expressed today, in Committee and on Second Reading the anxieties that freezing orders can restrict the ability of such people to live their lives in the way that they would choose. That of course is an encroachment on human rights and we are grateful to those noble Lords who, as members of the legal profession, are able to identify exactly which human rights are involved in this. This Chamber has enough currency with regard to those significant debates of principle for all of us to be well aware of the importance of the issues.

--- Later in debate ---

I think this may be my swansong in this role so far as this House is concerned, so I will say that I am grateful for the support and the constructive criticism that I have had from noble Lords, including some of my noble friends. I hope that we will not in future have to have a debate about something as basic as the way the appointment takes place.

[Lord Davies of Oldham]

My Lords, I rise briefly to congratulate my noble friend on the way in which he moved this serious and important amendment for the House to consider and triggered a constructive and significant debate. I favour the amendment. It has not always been the case in recent years that I have favoured Back-Bench initiatives from my party, but one of the liberating factors in opposition is that one is able to reform old friendships after the obvious discipline that imposes itself in government. I am happy to indicate from the Front Bench how much we welcome the way in which my noble friend has acted in this respect and has presented this amendment today.

First, I want to make it absolutely clear that none of us has anything but admiration for the way in which the noble Lord, Lord Carlile, has carried out his duties. He has described with great accuracy this evening the nature of the role and its challenges, but his reputation has run before him over these many years. The fact that he identifies that he has spent nine years and 25 days in the role shows the degree of service that he has done to the nation in a very challenging role. I emphasise that in so far as we see merits in the amendment, that is in no way a criticism of the way in which the noble Lord carried his duties—far from it. We are great admirers of the way he discharged those responsibilities.

I also recognise what the noble Lord, Lord Lester, generously said. The Government have included two additional safeguards with regard to this legislation, on which they are to be congratulated. That is part of the reason, but not the sole reason, why we in the Opposition have been moved to offer support throughout the bulk of the debates in this House. We recognise that the Government are facing challenging issues in identifying this legislation accurately. On one point I disagree with the noble Lord, Lord Lester. I am not sure that an amendment of this kind can be described as potentially disfiguring the Bill. If the amendment brings a dimension to the Bill that meets the objective that my noble friend emphasised in his introduction—taking the hearts and minds of our people with us on combating terrorism—we need the confidence of the nation in the processes that we put into place.

[Lord Lester of Herne Hill]

I do not think that the amendment to which I put my name does so. I was simply seeking to say that in general one should not include unnecessary detail of a disfiguring kind, but I support the amendment, which is why I put my name to it.

[Lord Davies of Oldham]

I am delighted to hear that. I apologise for my slight misinterpretation of the noble Lord’s advocacy this evening. I thought that he put that point in to indicate that it might detract from the Bill when, of course, I assumed that he signed the amendment with the wholehearted determination to support it as far as he was able. He certainly largely did so in his contribution this evening.

As I indicated, I want to speak only briefly with regard to this issue. We find merits in the amendment, and we hope that the House does too.

Pensions

Lord Davies of Oldham Excerpts

Thursday 21st October 2010 Lords Chamber

[Lord Sassoon]

My Lords, my understanding is that, thanks to work being done by the Association of British Insurers and others and the introduction of a new electronic transfer system, the actual time taken to make the transfer has come down from 35 days to 11 days. However, if there are other ways of making the transfer process easier, we will of course look at them.

[Lord Davies of Oldham]

My Lords, is not the real problem for the foreseeable future that, with interest rates low, the returns on annuities will be well below people’s expectations? Could not the Government think more radically about this in the longer term? Could we not think of following the pattern adopted by some other European Governments on annuities, whereby people would be able to purchase government bonds at a slightly better rate of interest than obtains at present and at the same time contribute to the Government in the shorter term sums which would help the Exchequer?

[Lord Sassoon]

My Lords, low interest rates are vital to the growth of the economy. In that context, it is important that people are able to choose between a wide variety of savings products. As well as making more flexible people’s choices about their retirement savings, the Government offer not only the opportunity to invest in gilt-edged securities but a range of products through NS&I.