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and

Our tools therefore must include action against terrorist finance, which is now an important part of the UK's counter-terrorism strategy.

Mr. Douglas Hogg (Sleaford and North Hykeham) (Con) rose-

Mr. Byrne: Before I give way to the right hon. and learned Gentleman, I should make clear that my remarks this afternoon will touch on the background to the Bill, its contents, and some of the safeguards that it is vital for the House and another place to debate.

Mr. Hogg: That is very important and we look forward to hearing what safeguards will be put in place. However, it would be helpful to know why, having had ample time, the Government have never before put the provisions into primary legislation, and have relied always on statutory instruments, which were not subject to proper scrutiny.

Mr. Byrne: That is a fair point, and I will talk about it later in my remarks. Suffice it to say, the United Nations Act 1946 was fairly clear, and it is probably worth reading the relevant clause for the benefit of the House:

In the eyes of the Government, that was an effective legal base on which to introduce terrorism legislation.

Mr. John Gummer (Suffolk, Coastal) (Con): I am happy that the Government felt that that was the effective legal base. The issue that many of us want to raise is this: if such matters are not debated in Parliament, the disadvantage is that the necessary safeguards are often not put in place. The problem-on both sides of the House-is that the Government seem not to believe that Parliament is the proper place for such decisions.

Mr. Byrne: Parliament is the proper place to debate those safeguards. That is why, alongside this temporary Bill, we published a full Bill that will transpose the relevant orders into statutory legislation. We will debate that question a little later, but it is vital that the House is given a full opportunity to pressure-test the proposals in that second, main Bill.

Mr. Humfrey Malins (Woking) (Con): As we know, the measures are fairly draconian, but what does the Minister think was the original intention? Was the standard that the Government would have only to say that a person was involved in terrorism, or would they have needed a reasonable suspicion or evidence? What was the standard or test originally and what is it today? Could it be that the original test required something higher?

Mr. Byrne: Perhaps the hon. Gentleman will intervene again to clarify one point. When he refers to the "original test", is he referring to the original test in Orders in Council or in the United Nations Act 1946?

Mr. Malins: I might be wrong, but I think I am referring to the original test not in Orders in Council but in the 1946 Act.

Mr. Byrne: The 1946 Act did not set out any such test; rather, it set out a broad power for the Government to introduce measures, including those for

That was the legal basis that was tested by the Supreme Court. The Supreme Court's judgment in taking away the foundation on which the Government had rested was reasonably narrow. The Supreme Court refused to read "expedient" as wide enough to cover reasonable suspicion-that is perhaps the point that the hon. Gentleman was making. Rather, it concluded that it would be wrong to give "expedient" such an expansive meaning where the result is such an interference with individuals' rights.

David Howarth (Cambridge) (LD): That is the crucial point. The Court made its decision because the order undermines fundamental rights. The Court was making the point that the Government should not undermine fundamental rights, and especially not without any parliamentary procedure. The right hon. Gentleman seems to be rearguing his case before the Supreme Court. He does not seem to accept the fact that he lost the case.


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Mr. Byrne: The reason why I am here this afternoon is that we lost the case. The point that I was hoping to make is that under the terms of the United Nations Act 1946, which I have read out, it is quite easy to see how the Government proceeded in good faith, because that Act appeared to give quite generous provision for the Government to bring forward proposals giving effect to UN Security Council resolutions.

Mr. Neil Gerrard (Walthamstow) (Lab): The real issue is not so much the 1946 Act, but Security Council resolution 1373, the terms of which the Supreme Court referred to in determining that the orders should be quashed. The Court talked about reasonable suspicion and whether it was a basis for taking action.

Mr. Byrne: I will address that point slightly later, because it touches on the issue of designation, on which it is important to debate the test that the Government must meet. Just to clarify, the Supreme Court struck down the legal basis for the Terrorism (United Nations Measures) Order 2006. However, two further terrorism orders depend on the same provision in the 1946 Act, which is why they are the subject of the legislation before us today. There is a fourth order-the Al-Qaida and Taliban (United Nations Measures) Order 2006-of which the Supreme Court struck down article 3(1)(b), which concerns United Nations Security Council resolution 1267, and I will touch on that in more depth in a moment or two.

The history of our fight on this front is not long. The asset-freezing regime introduced by the Security Council dates back only to 1999, when it was established as part of the fight against the Taliban. It was quickly extended to include Osama bin Laden and persons associated with al-Qaeda. In the weeks following 11 September 2001, the UN created a separate requirement on member states to freeze the assets involved in terrorism more generally, where individuals were identified by member states. The way in which the Government responded allowed us to act quickly. Using secondary legislation under the 1946 Act, we ensured that our freezing regime was in place by 10 October 2001, just 12 days after the United Nations made its resolution in New York.

The United Kingdom was the first nation to be judged fully compliant with the international standards set by the Financial Action Task Force. Today, around £375,000 in suspected terrorist assets is frozen. That includes around £150,000 frozen under the secondary legislation in the terrorism orders. A much smaller figure is frozen under the Terrorism Act 2006, on which the Supreme Court passed judgment.

When, therefore, the Supreme Court struck down the legal basis on which we acted in good faith, we thought it imperative to act rapidly to present this Bill before the House. Our use of the United Nations Act 1946 was, as I have argued, logical because it says that the Government can make provisions through Orders in Council when "necessary or expedient". As my hon. Friend the Exchequer Secretary has already pointed out, the Court of Appeal agreed with the judgment; the Supreme Court did not, which is why we find ourselves here this afternoon.

David Howarth: That brings us to the issue of what the Government are doing now about the Supreme Court's judgment. Why have they not simply used the
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2001 Act to freeze the assets of such individuals, as Lord Hope in the Supreme Court said specifically that, in his opinion, that Act would apply?

Mr. Byrne: I am not sure whether the hon. Gentleman is referring to the 2001 Act or the 2001 order.

David Howarth: I am referring to sections 4 and 5 of the Anti-terrorism, Crime and Security Act 2001. Lord Hope said that the freezing regime in that Act applied to the individuals before the Court in the Ahmed case.

Mr. Byrne: We did not do so for the simple reason that that is not a sufficiently general defence. Indeed, the 2001 Act deals with threats emanating from outside the UK, whereas the terrorism order regime that we are seeking to legislate for today touches on threats that emanate from inside the UK, specifically from UK individuals.

David Howarth: This sounds like a point of detail, but it is crucial to what is happening today. Section 5 of the 2001 Act applies the freezing regime not just to individuals abroad, but to any individual in this country who is assisting that individual. What the Minister says applies only to circumstances where the whole plot is domestic. That did not seem to apply in the cases before the Court; how many other cases are there where the plot is entirely domestic?

Mr. Byrne: I could not speculate on how many cases the security services are monitoring where the threat is entirely domestic, but let me be clear that the provision to which the hon. Gentleman is alluding would not cover UK persons unless we could demonstrate a link to external persons who pose a direct threat to the UK or to UK nationals. In the case of a UK plot, the link would, as the hon. Gentleman says, be absent. The point of the regime is that it is designed to enable preventive action. That is why, as is common in much national security legislation, the thresholds in question include reasonable suspicion.

Mr. Hogg: The right hon. Gentleman will be familiar with much of the anti-terrorism legislation in place, so he will know that most Acts have provided for at least limited repeal or review of the orders made thereunder. The right hon. Gentleman has known for a long time that he might have to legislate in this context, but his Bill provides for no form of review or appeal against the scope of the freezing orders or, for that matter, against designation. Why did he not make such provisions in the Bill?

Mr. Byrne: I hope to touch on the question of judicial review later in my remarks, but there are three basic points to be made in response to the right hon. and learned Gentleman. First, the Government were relying on the United Nations Act 1946 in good faith. Before the Supreme Court passed judgment, it would not have helped our case to bring legislation forward that showed that we were worried about that or that we wanted to provide for a different legal basis.

Secondly, that judgment having been passed, it is surely right for the Government to bring forward comprehensive legislation to deal with the problem that we are trying to solve. I personally do not think that
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such legislation should be whipped through the House. Even for a period as short as eight weeks, such proposals, if transposed into legislation, should benefit from Select Committee pre-legislative scrutiny and be subject to a review by Joint Committees, which would take a considerable period. However, because the Supreme Court did not grant a stay in its judgment, about £16,500 linked to about 14 people could, under the Terrorism Act 2006, suddenly be made available. My view was that the best strategy was to put in place temporary legislation to help ensure that the banks kept those assets frozen while the House was able to take the time to put on the statute book a more substantive answer to the Supreme Court's judgment.

Mr. Mark Hoban (Fareham) (Con): When the matter was discussed with the Treasury last week, plan A was to put a Bill on the statute book in eight weeks. The sudden conversion to greater time being spent and more pre-legislative scrutiny arises simply as a consequence of the Supreme Court's judgment on Thursday to quash the orders. What else has accounted for the Chief Secretary's change of mind?

Mr. Byrne: There is the simple idea that eight weeks is not an ideal time in which to pass the legislation. The legislation could have gone through in eight weeks, but if it is possible to give the House more time to debate it, that is surely right. What changed last week was the Supreme Court's decision not to grant a stay. It would have been unreasonable to ask the banks to keep the money frozen for the amount of time it would have taken the House to give the matter proper consideration.

Mr. Andrew Dismore (Hendon) (Lab): My right hon. Friend has published the draft Bill, which is available in the Vote Office, and I welcome his invitation to my Committee to scrutinise it. Were we required to do so, however, it would not take us eight weeks to produce a report on the Bill. I have half scrutinised it already, and I can tell him now what the issues are, including lack of right of appeal and the test to designate someone in the first place.

Mr. Byrne: I look forward to that debate ensuing.

Mr. Hoban: The route available now to the Government -the emergency Bill today and a longer period of scrutiny-could have been the plan originally discussed between ourselves and the Treasury when the issue first arose. Suddenly, the Government have had a change of heart. We could have had the emergency legislation before us today and the longer discussion period for the Bill, but when the Supreme Court issued its original judgment, the longer Bill was the preferred option. There was no sense then from the Treasury that there was a plan B. It has suddenly arisen as a consequence of last Thursday's judgment.

Mr. Byrne: The answer to the hon. Gentleman is simple. The Supreme Court said that it was willing to consider a stay, but its judgment on Thursday was that it was unprepared to grant that stay. Therefore, the Government had to ensure that assets already frozen under the Terrorism Act-the orders that had effectively been quashed- remained frozen. That gives the House the opportunity to consider in more detail and depth
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the provisions of the orders that we will seek to put into primary legislation in a much longer period. That debate will produce a better piece of legislation at the end of it.

If passed, the Bill will restore the UK's terrorist asset-freezing regime in primary legislation, but only as a stop-gap. It will allow the House to scrutinise our proposals while eliminating any risk of a gap in our asset-freezing regime. I would like to outline briefly the Bill's effects, before touching on some of the questions around safeguards.

The Bill seeks to maintain the Treasury's power under the Orders in Council to designate persons if they meet both required conditions of the legal test: first, reasonable suspicion that the person is involved in terrorist activity; and secondly, that the designation is necessary for public protection. The effect of a designation is: to forbid dealing with a designated person's funds and economic resources; to forbid making funds or economic resources available to such persons; and to forbid funds or economic resources being made available to a person when the designated person will obtain significant financial benefit. The orders will continue to provide for licences to permit access to funds and to ameliorate the effect of the sanctions. The Treasury will remain open to the full range of legal challenge of its asset-freezing decisions. However, the Bill seeks retrospective provision for the legal authority for banks and any other institution to maintain existing freezes between the date of the Supreme Court judgment and Royal Assent.

Mr. Hogg: The Chief Secretary said that the Treasury will be subject to the full weight of judicial review, but he will be the first to acknowledge that that is a limited remedy, which falls far short of the specific appeal mechanisms that should be in place to determine the justice or otherwise of particular orders as they affect particular individuals, and the designation of those individuals.

Mr. Byrne: I shall discuss judicial review in a little more detail shortly. The point that I am making is simply that this Bill does not give the Treasury any retrospective protection in relation to decisions made between the handing down of the Supreme Court judgment and Royal Assent.

There are five safeguards that I wish to mention in order to provoke what I think is an important debate about the dimensions of the Bill. Let me begin by dealing with the question of who is included in its ambit. The orders that we propose to underpin ensure that-as I have said-individuals and organisations can be designated only if a reasonable suspicion test is met, and if a second test establishes that action is needed to protect the public. Freezes will be removed from those for whom the legal test fails. The Treasury has a track record of actively reviewing designations and revoking them when they no longer meet the legal tests. Of the 51 United Kingdom designations made under orders to date, 18 have been revoked following a Treasury review-for example, when criminal charges have been dropped, or when an individual is no longer considered to pose a significant threat.

The Treasury must be satisfied that there are reasonable grounds to suspect a person, and reasonable grounds for suspicion must always be based on fact. The facts are provided in a statement of case prepared by the
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police or the security services, and the basis for action is endorsed by the financial action taskforce. The Treasury does not casually make up a determination of what is in the interests of public protection and what is not. In determining whether a person constitutes a threat, it will consider the advice of the police and the security services.

Mr. Dismore: Is either the whole or the gist of the factual matrix to which my right hon. Friend has referred available to the person whose assets are to be frozen, in accordance with the requirements of asset-freezing?

Mr. Byrne: Yes, and when individuals wish to challenge decisions that entail closed-source evidence, the special advocacy procedure is also available.

The second question on which I want to touch is whether the proposed acquisition of powers by the Executive strikes the right balance between protecting national security and protecting the rights of our citizens. The Bill aims to ensure that the Government's actions are proportionate, and that they intervene only to the extent that is necessary to disrupt terrorist finance. That approach mirrors international best practice for terrorist asset-freezing, which in turn reflects standards set out by the Financial Action Task Force. The orders therefore include a licensing regime which ensures that designated persons have access to legal aid and living expenses. A wide range of other expenses can also be allowed when it is judged safe for that to be done.

The licensing regime is now sophisticated and well developed, and helps us to guarantee the proportionality of asset-freezing. Last week, in her statement to the House on licensing, the Exchequer Secretary announced a new approach that will safely lighten the impact of the regime on the families of designated individuals. The Treasury will continue to report to Parliament each quarter on the operation of the asset-freezing regime.

Mr. Robert Syms (Poole) (Con): Is the test of reasonable suspicion carried out individual by individual or organisation by organisation? If an organisation with 2,000 or 3,000 members were deemed to be a threat to the state, would it be possible to freeze the funds of those 2,000 or 3,000 people, or would they be dealt with on a case-by-case basis?

Mr. Byrne: I am grateful for the opportunity to clarify the position. They would be dealt with on a case-by-case basis, and in line with code A of the Police and Criminal Evidence Act 1984, which provides the Government with guidance on reasonable grounds for suspicion.

Mr. Dismore: My right hon. Friend mentioned the licensing regime, which governs people's living expenses. I do not see any provision in the draft Bill that provides for an appeal or review at the instigation of the individual concerned if he claims that the amount allowed is not enough. Is there any way in which such an individual can question the amount?

Mr. Byrne: Yes, indeed. Licensing decisions can be, and are being, challenged in court to ensure that they are appropriate.

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