Oral Answers to Questions

Debate between Julian Huppert and David Gauke

Tuesday 24th June 2014 Commons Chamber

[Dr Julian Huppert (Cambridge) (LD)]

5. What steps he is taking to ensure that people pay the taxes for which they are liable.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

Since 2010, the Government have been determined to support HMRC in improving overall compliance levels, tackling tax avoidance, evasion and fraud, and punishing those who break the rules. Overall we are investing about £1 billion in HMRC’s compliance activities, and HMRC achieved record levels of compliance revenues last year, securing £23.9 billion.

[Dr Huppert]

It is a huge frustration to people to see wealthy individuals and large companies avoid paying the taxes that they ought to be paying. I thank the Minister for his comments, but will he go further to make sure that our rules are fit for purpose? Will he tackle, for example, transfer pricing, and ensure that there is an international agreement that benefits Britain and means that people pay the correct amount of tax in this country?

[Mr Gauke]

As the Chancellor made clear a moment ago, it is right that we address these issues, and that we do so at an international level. The Organisation for Economic Co-operation and Development’s important work on base erosion and profit shifting is a consequence of the leadership shown by the Prime Minister and the Chancellor, and we hope that we will see the fruits of that progress beginning this autumn.

Oral Answers to Questions

Debate between Julian Huppert and David Gauke

Tuesday 29th January 2013 Commons Chamber

[Mr Gauke]

This Chancellor has done more to tackle tax avoidance than any of his predecessors, and this Government have taken tax compliance much more seriously. I will give one more statistic: when we took office the yield from HMRC’s enforcement and compliance activity was £13 billion. We expect that number to have increased to £22 billion by the end of this Parliament. We are taking real steps to address this matter.

[Dr Julian Huppert (Cambridge) (LD)]

10. How much VAT was paid by (a) sixth-form colleges and (b) further education colleges in 2012.

Terrorist Asset-Freezing etc. Bill [Lords]

Debate between Julian Huppert and David Gauke

Monday 15th November 2010 Commons Chamber

[Mr Gauke]

The right hon. Gentleman’s comments are helpful, as always, and I am sure they have been duly noted.

It is right to point out that asset freezing is a preventive tool, and that people can be subject to a freeze only if the legal test is met—in other words, if they represent a terrorist threat and so the freeze is necessary for public protection. The Treasury must have reasonable grounds to suspect their involvement in terrorist activity. I will return to that point in greater detail when I turn to the comments of the Joint Committee on Human Rights. It is also worth pointing out that 21 of the 24 persons in the UK subject to these measures have been charged with, or convicted of, terrorist offences.

Asset freezing is not just an effective domestic tool, it is necessary. The UK has an international obligation to freeze the assets of terrorists, and the Government are content that the Bill’s provisions remain fully compliant with international standards and are sufficiently robust to meet the needs of the police and security services, who are engaged in a day-to-day battle to maintain the security of the general public.

The right hon. Gentleman asked one or two questions about complaints. Any person who is not satisfied with a decision taken by the Treasury may request a review of the decision, and if after that review they are still unsatisfied, a complaint regarding the handling of the case can be made under the Treasury’s official complaints procedure. A senior official not directly connected with the case will then take the review decision. A designated person may appeal against their designation through the courts, and in the case of any other decision, such as on licensing, applications can be made to the High Court for the decision to be set aside.

The right hon. Gentleman asked what happens to people whose freezes have been revoked. As he pointed out, the revocation of a freeze does not show that the system is failing to work or that the imposition of a freeze in the first place was wrong. Circumstances can change, so it may no longer be necessary to maintain a freeze even though it was necessary when it was imposed. When a freeze is revoked, the individual concerned is notified, the revocation is brought to the attention of the financial sector and the outside world and the restrictions on their financial activity are removed.

One concern that has understandably been raised is whether the system is well targeted on terrorism. My hon. Friend the Member for Cambridge made that point. Terrorism, for the purposes of the Bill, is defined in clause 2(2) as involving one or more of

“the commission, preparation or instigation of acts of terrorism…conduct that facilitates the commission, preparation or instigation of such acts, or that is intended to do so”,

or conduct that supports or gives assistance to persons believed to be involved in such conduct.

To respond to the point made by the right hon. Member for Delyn (Mr Hanson) about organised crime, the Bill contains very specific powers designed to meet our UN obligations to freeze the assets of terrorists. They are not intended to be used against organised criminals unless they are also involved in terrorism, and the Government have other powers to deal with organised crime.

I turn to the very important issue of civil liberties, because we have to get that right and ensure that the balance is correct. As my hon. Friend the Financial Secretary set out, the Bill does not simply reintroduce the previous regime, which the Supreme Court quashed. We have introduced additional safeguards and made changes to ensure that the regime operates in a clearer and more transparent manner. Those changes reflect the civil liberties concerns that were raised in Parliament during the passage of the emergency legislation and in the public consultation exercise conducted over the spring and summer. We do not believe they will undermine the effectiveness of the regime or continued compliance with international best practice.

I shall highlight the key elements of those changes. We are introducing more targeted prohibitions, to limit the impact of asset freezing on innocent third parties. There is provision to ensure that the regime does not catch the payment of state benefits to the spouses or partners of designated persons, and so does not have the draconian impact on family life about which the Supreme Court was concerned. The establishment of an independent review function will ensure that there is proper independent scrutiny of the asset-freezing regime.

As the Financial Secretary highlighted, during the Bill’s passage in the other place the Government introduced significant further safeguards to raise the legal test for freezing assets for more than 30 days from reasonable suspicion to reasonable belief, and to strengthen judicial oversight by ensuring that there is a full merits-based review of designation decisions. Those are important new safeguards that will make the asset-freezing regime significantly fairer, more proportionate and more transparent, and I welcome the endorsement that they have received from hon. Members today. However, we have also heard in today’s debate, and read in the report of the Joint Committee on Human Rights, some calls for the Government to go further and introduce more civil liberties safeguards. I wish to respond to those points.

One concern that has been raised is that reasonable belief is still too low a threshold for freezing assets, and that the Government should be able to do so only on the balance of probabilities—in other words, if someone is more likely than not to be involved in terrorism. It has even been argued that asset freezes should be imposed only in cases of criminal charge or conviction. I shall reiterate why the Government do not agree with, and cannot support, those proposals.

To meet our UN obligations and protect national security, asset freezing must be preventive: that is, it must be capable of being used at an early stage to disrupt and prevent terrorist attacks. Setting the legal test higher than reasonable belief would make it more difficult to use the asset-freezing tool in a preventive manner, and therefore make it less effective because the level of evidence needed may rule out the use of asset freezing when it could be most useful.

[Dr Huppert]

Does the Minister genuinely think it appropriate to freeze people’s assets when the Treasury believes that it is more likely that they are not involved in terrorism than that they are so involved?

--- Later in debate ---

[Mr Gauke]

I reiterate that it is necessary to have a tool available to use at an early stage, for preventive reasons. The asset freezes imposed on those suspected of involvement in the transatlantic plane bomb plot in 2006 provide a good example of the value that preventive asset-freezing can have for national security. It is important that we preserve that element of asset-freezing. In the Supreme Court, Lord Rodger spoke of the nature of intelligence and the need, sometimes, to act on information that is fragmentary and not certain. For the same reason, the Government cannot support limiting asset-freezing to those charged with, or convicted of, a terrorist offence.

Although a significant majority of those in the UK whose assets have been frozen have been charged or convicted of a terrorist offence, limiting freezing to such people would have two significant drawbacks. First, preventing the Treasury from freezing assets when it reasonably believes that someone is involved in terrorism and when it considers that asset-freezing is necessary to protect the public, but when a person has not been, or could not be, charged, would incur a significant cost for national security. Secondly, limiting freezing in that way would severely curtail the Treasury’s ability to freeze the assets of international terrorists or terrorist groups operating overseas. Many such persons and groups operate in countries where they will not be prosecuted, perhaps because the country does not have the capability or the will to prosecute terrorists.

[Dr Huppert]

I understand the Minister’s point about those not in Britain, but what about those who are, and hence subject to our controls? Given that the threshold for powers of arrest is reasonable suspicion, does he agree that anyone who has enough evidence to freeze assets would also have enough evidence to arrest?

[Mr Gauke]

Given the flexibility that we need, I believe that we have struck the right balance by allowing an interim arrangement on the basis of reasonable suspicion followed by a longer-term arrangement on the basis of reasonable belief. Sometimes, it is a question of timing and we may need to act first on freezing assets and subsequently to make an arrest—we must remember that after all, the vast majority of those in the UK who have been subject to a freezing order have gone on to be arrested. For example, if we limited the Treasury’s freezing powers to those charged or convicted, we could prevent the UK from co-operating with international partners when we are trying to prevent funding getting to international terrorists and terrorist groups. For those reasons, the Government remain convinced that the legal test as set out in the Bill—reasonable suspicion for an interim period of 30 days and reasonable belief for a final designation—strikes the right balance.

My hon. Friend the Member for Cambridge mentioned the role of the courts, which has also been raised by civil liberties groups. They have called for a mandatory court involvement in asset-freezing. They want freezing decisions either to be made by the courts or to be approved by them mandatorily, but the Government do not support those proposals. Decisions to freeze assets are national security measures taken on operational advice from law enforcement and intelligence agencies, and fall squarely within the remit of decisions that Ministers should and do make on other matters, such as prescription, deportation and exclusion. Ministers are accountable for their designations both to Parliament and to the courts.

We also do not believe that mandatory court approval for asset freezes is the right approach. Only a very small minority of asset-freezing cases—around 10% of current cases—concern people in the UK who have not been prosecuted for a terrorist offence. The remaining 90% of cases concern either individuals in the UK who have been prosecuted or individuals and groups overseas. Mandatory court approval would therefore add no value in those 90% of cases. Indeed, it might even be unhelpful. For example, overseas terrorist groups who do not currently challenge asset freezes would nevertheless have their designations subjected to mandatory court scrutiny.

My hon. Friend also mentioned written reasons. We heard today that the JCHR recommends that an express requirement to provide reasons for a designation, subject to public interest requirements of non-disclosure, be written into the Bill. The Committee’s reasons for that were eloquently put, but the Government are not convinced that an express obligation on the Treasury to provide reasons for a person’s designation is necessary. It is already a requirement of the basic principles of administrative law to provide reasons for a designation where possible, subject to public interest requirements. If this Government or any other were to write into a Bill all the Treasury’s obligations under administrative law, such a Bill would be considerably longer. I do not see that as desirable. The time available for parliamentary scrutiny should not be spent debating unnecessary provisions. I should also make it clear that there will be times when the Government cannot divulge the case against a person or the reason for a designation, such as when sensitive intelligence has been relied on for a decision and there is an obvious case for withholding information. None the less, where possible, the Government disclose information when that can be done without, for example, damage to a pending prosecution or to national security. There is no sensible reason to go beyond that and write such a requirement into the Bill.

The JCHR also sought to convince hon. Members that the Government should accept the principle set out in the House of Lords in the case of AF on the use of special advocates and closed-source material. It said that that principle should apply to asset-freezing provisions. I am sure that hon. Members have read Hansard and are aware of the debate on that in the other place. I can but restate the points that the Government made then. First, the courts have not considered whether AF applies in asset-freezing cases, and it is not the role of the Government to prejudge what the courts would say. Secondly, the Supreme Court will consider the wider application of AF (No. 3) in January 2011 when it hears the Tariq case. Thirdly, the Government are committed to ensuring that any challenge to a Treasury decision is heard fairly. Finally, the application of AF (No. 3) is part of a wider debate on the use of special advocates and intelligence material, and we have already announced that we will be considering the use of special advocates and closed-source evidence as part of a Green Paper next year.

There will be plenty of opportunity for the JCHR and other interested parties to relay their views as part of the consultation that informs that Green Paper. It is right and proper that the Government give all parties the option of commenting on such an important mechanism without prejudging the outcome.

The final matter raised by the JCHR is the question of transparency and accountability. The Bill strengthens transparency and accountability in two ways. First, we are enshrining in legislation the Treasury’s existing practice of presenting quarterly reports to Parliament on the operation of the powers in the Bill. That will guarantee transparency on the quarterly operation of the regime. Hon. Members will note that the most recent quarterly report was laid today. Secondly, we have written into the Bill that the operation of the regime should be independently reviewed nine months after the Bill is passed and every 12 months thereafter.

The JCHR maintains that the provision in the Bill for an independent reviewer does not go far enough and that the independent reviewer should be more independent of the Government—the right hon. Member for Delyn made that point in the debate. I am sure that that will be debated further in Committee, but the Government cannot accept the JCHR position. We are committed to effective scrutiny of the asset-freezing regime and the independence of the reviewer will be a principal objective of any appointment, but for Parliament to approve the independent reviewer would be a significant departure from standard practice. The appointment of the reviewer by the Government reflects the long-standing principle that Ministers are directly accountable to Parliament and the public for those whom they appoint and for the operation of the regime.

[Mr Gauke]

I am grateful for the point that the right hon. Gentleman makes. The final decision on that is still to be made, so if he will just be a little patient, he will receive the answer in due course.

[Dr Huppert]

The Government have recently started taking the approach that independent people can be scrutinised by a Select Committee to check that they are sufficiently independent. Could we go down that route to check the independent reviewer?

[Mr Gauke]

I am on the record many times as arguing why Parliament should have a significant role in a number of public appointments, but in this area we have arrangements whereby Ministers take responsibility and are accountable. We will ensure that the independent reviewer is free to examine any aspect of the regime, and his or her findings and recommendations will be released in full to Parliament. We also think that the Treasury has to have sight of the independent reviewer’s report prior to its being laid before Parliament, but that is only for the entirely sensible and understandable process of ensuring that no material detrimental to national security is inadvertently released. To answer the question specifically, Ministers have to take responsibility on this and we are not inclined to move away from that position.

I wish to address a point made by the hon. Member for Cambridge about ensuring that a designated person has reasonable expenses and is not left in desperate hardship. There is a requirement in law for the Treasury to implement asset freezes proportionately, taking full account of the human rights of a designated person and their family. My hon. Friend the Member for Hexham asked whether a designated person is able to fund their appeal—there was concern that that might not be the case. The Treasury has issued general licences to enable any legal aid payments to be made to a designated person’s solicitors where they are eligible for legal aid and to allow third parties to pay a designated person’s legal expenses. Where a designated person wishes to use their own funds for legal expenses, an individual licence can be applied for. The asset freeze does not, therefore, hinder a designated person from challenging their designation or any other decision, such as to impose particular licence conditions.

I wish also to pick up on the points raised by the hon. Member for Upper Bann. He raised the concern about decisions being taken not to publicise a designation and asked whether there is a danger that third parties are not aware of the designation—that is a perfectly fair point. The offences in the Bill apply only where a third party is aware, or should be aware, of the designation; if they do not know, and have no reason to know, no offence will be committed. I hope that that provides some reassurance to him. Where a designation is not publicised, financial institutions will still be informed, as that helps to ensure that funds are frozen. I reassure him that decisions not to publicise are rare and are always taken for very good reasons, and that the designated person will be told.

I also wish to pick up on the hon. Gentleman’s point about whether someone could be subject to a 30-day freeze on the basis of suspicion and then be subject to another such freeze after the first one is dropped. Freezes cannot be continually retained on the basis of reasonable suspicion by dropping a freeze after 30 days and then reimposing it as the new interim freeze based only on reasonable suspicion arising from the same or substantially the same evidence—clause 6(3) makes specific provision on that. A new interim freeze could be made if there is significant new evidence that significantly contributes to a fresh reasonable suspicion on the Treasury’s part. Without such new evidence, a freeze could be maintained after the 30 days only if there was reasonable belief that the person is involved in terrorism.

I shall now deal with the questions raised by the right hon. Member for Delyn about the overall counter-terrorism review and its relationship with this Bill. This is a stand-alone Bill and it is not intended to be further amended by the counter-terrorism review. The Government have already considered civil liberties safeguards for this Bill and introduced amendments at Committee stage in the other place, as I have mentioned. There is no intention to amend the Bill further.

In conclusion, today’s debate has been about the balance between national security and safeguarding civil liberties. I am convinced that the Bill strikes the right balance between both. It is effective and fair, it takes the necessary steps to prevent the raising and use of funds for terrorist purposes and it sets the terrorist asset-freezing regime in primary legislation for the first time. I commend the Bill to the House and look forward to further discussion in Committee.

Question put and agreed to.

Bill accordingly read a Second time.



Terrorist Asset-Freezing etc. Bill [Lords] (pROGRAMME)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Terrorist Asset-Freezing etc. Bill [Lords]:

Committal

1. The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2. Proceedings in the Public Bill Committee shall (so far as not usbpreviously concluded) be brought to a conclusion on Thursday 25 November 2010.

3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.

Other proceedings

7. Any other proceedings on the Bill (including any proceedings on consideration of any message from the Lords) may be programmed.—(Angela Watkinson.)

Question agreed to.



Terrorist Asset-Freezing etc. Bill [Lords] (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Terrorist Asset-Freezing etc. Bill [Lords], it is expedient to authorise—

(1) the payment out of money provided by Parliament of any expenses incurred by

the Treasury or any other Minister of the Crown in consequence of the Act; and

(2) the making of payments into the Consolidated Fund.—(Angela Watkinson.)

Question agreed to.